Six reasons why Microsoft struggles with innovation

Microsoft invents a lot of great stuff but finds itself stuck when it comes to implementation.

When I think of Exchange 2010 and its hybrid approach to cloud computing, it reminds me that Microsoft can be innovative. With Exchange 2010, users can keep some e-mail accounts on premises while sending others to the cloud. It strikes a good balance between maintaining what customers want in an e-mail server product while gently leading them into next-generation cloud e-mail. But Exchange's hybrid approach is the exception. Overall, Microsoft struggles mightily with innovation for these six hard-to-fix reasons.

Windows 7 Feature Focus: Libraries
Windows 7: the grown-up Vista

No. 1: Me-too thinking. The company spends billions annually on R&D and while it does have a whole bunch of interesting technologies in its labs, it focuses heavily on bringing me-too wares to market. It then tries to peel away customers who are basically happy with the original. Here is a list: MP3 players, video game consoles, Webcams, mobile platforms/devices, cloud-based Office applications, multimedia Web development, and Internet search and advertising. Arguably, Hyper-V can also be added to this list although Hyper-V is a good hypervisor at a great price that has a shot of overturning VMware's market-leading position.

To continue reading, register here and become an Insider. You'll get free access to premium content from CIO, Computerworld, CSO, InfoWorld, and Network World. See more Insider content or sign in.

When I think of Exchange 2010 and its hybrid approach to cloud computing, it reminds me that Microsoft can be innovative. With Exchange 2010, users can keep some e-mail accounts on premises while sending others to the cloud. It strikes a good balance between maintaining what customers want in an e-mail server product while gently leading them into next-generation cloud e-mail. But Exchange's hybrid approach is the exception. Overall, Microsoft struggles mightily with innovation for these six hard-to-fix reasons.

Windows 7 Feature Focus: Libraries
Windows 7: the grown-up Vista

No. 1: Me-too thinking. The company spends billions annually on R&D and while it does have a whole bunch of interesting technologies in its labs, it focuses heavily on bringing me-too wares to market. It then tries to peel away customers who are basically happy with the original. Here is a list: MP3 players, video game consoles, Webcams, mobile platforms/devices, cloud-based Office applications, multimedia Web development, and Internet search and advertising. Arguably, Hyper-V can also be added to this list although Hyper-V is a good hypervisor at a great price that has a shot of overturning VMware's market-leading position.

What should Microsoft be doing instead the me-too game? Solving problems that others cannot. For instance, no other company knows more about developing operating systems than Microsoft. How about using that knowledge to help the world get off the hack/patch/fix/test/hack/patch cycle with say an entirely new operating system concept? We've heard snippets of such an operating system, called Singularity (formerly code-named Midori). It's reportedly been in development since 2003. 'Nuf said.

No. 2: Microsoft's customers don't like change: Microsoft is hamstrung by its own success. So says Microsoft Subnet's newest blogger, Michael Surkan. Surkan discussed with me the Windows Filtering Platform in Vista, and the complete overhaul of the network stack. He spent months reaching out to third parties that could be affected by the change, such as firewall makers. But with as many ISVs as Microsoft has, changes always tends to break something, somewhere, and Microsoft gets blamed, even if it did all it could to prevent such situations. Microsoft learned its lessons with the Windows 7 process of releasing many beta versions. But Windows 7 is basically an improved version of Vista. Application incompatibility will be kept to a minimum, but so, too, is innovation. Enterprises shoulder some responsibility. They stay with Microsoft because they know the technology. Change too many things and Microsoft opens the door for competitors. The enterprise that pays high prices and signs long-term contracts does so with the demand that Microsoft keep changes to a minimal. (Some enterprises are still clinging to Internet Explorer 6, for goodness sake.) Microsoft is trapped by a circumstance where innovation is at odds with stability.

No. 3: An inability to partner for great technology. Microsoft has a "built-it-here" mentality that does not serve it well. Why did Microsoft choose to create its own hypervisor instead of buying VMware when it was a start-up, or partner to embed VMware in with Windows Server? Why did Microsoft spend what some estimate to be a $1 billion developing the Xbox? It could have sold plenty of high-profit games on other wildly popular hardware platforms. When it comes to the server/PC and mobile market, Microsoft has put itself in another no-win situation. On the other hand, it doesn't own the hardware. Yet, it dictates hardware requirements so severely, its partners are eager to bring their innovative ideas to alternative platforms ... such as Acer's Android netbook. To be fair, no large-scale technology company does partnering especially well.