Microsoft, It's All About Perspective
When you look at the stock prices of Microsoft, Google, and Yahoo! during the past 5 years it appears quite apparent why Microsoft recently bid $44.6B to buyout Yahoo! - Microsoft has performed poorly compared to Yahoo! and Google during the past 5 years. Unfortunately, this type of thinking of short-term thinking is what I believe has caused Microsoft to perform so poorly since Bill Gates stopped being in charge. If we take a step back and look at the all-time performances of these companies, it is much clearer that these past 5 years are a blip on the radar for Microsoft. Microsoft is no longer an innovative software company with a solid view of the long-term future.
The fact that I am using Google Finance charts to illustrate this fact is one reason why Microsoft is no longer innovative: they refuse to share their technological prowess with their customers. Google and Yahoo! (to a lesser, but still equivalent extent as Google) allow the programmers with time to kill to access the core application programming interfaces (APIs) that power their online tools, which in turn allows wannabe programming superstars to create neat add-ons and extra features at a speed unparalleled by a large company with project costs and revenue potential to worry about. Yes, Microsoft has great programming tools, but they don't allow programmers to extend their systems through nifty "hacks" to what they have already built. Primarily I am speaking about Windows and the MS Office software that Microsoft is so well known for, but I believe this type of problem extends into Microsoft's XBox and other online services as well. Just because you can patent and copyright your work does not mean you are guaranteed profits on that work for all eternity. Someone will and always does find a new way to beat you at your own game - either by extending your market (customers adding on extra services, i.e. extending Google and Yahoo! APIs) or through completely redefining the market. (online services, Apple iPod + iTunes, etc.) The founders of Google understood this, and have taken great pains to specifically design for innovation by both their own employees and by "outsiders" by opening themselves to external innovation. Yahoo! realized the power of this way of doing business late, but they're now behaving in similar ways. So why can't Microsoft be innovative again?
Secondly, I think Microsoft would be wise to stop worrying about what their competitors are doing so well today, and use those pent-up billions of dollars to redefine themselves to be successful in the long-term future. Windows Vista was not at all innovative, and by many accounts is a complete failure for the company. Microsoft needs to get back to the basics of making software that is simply superior to everything else out there like it. Microsoft Excel still far exceeds the capabilities and ease-of-use of OpenOffice Calc or other spreadsheet software that I have tried during the past 8 years of my career where I rely on spreadsheets on a daily basis. Microsoft Word and PowerPoint are unfortunately no longer as good as OpenOffice Doc and the Mac Keynote software applications, in my opinion. This is software that I will not be using via online services like Yahoo! or Google, and it is software that is also essential to my daily job. Why can't you make stellar business software again, Microsoft? You already have a decent OS installed at nearly every US company of any size, even if it is an inflexible, crusty, and boring OS. Make some great software for Windows once again, and you will be successful in the long run!
To quote a favorite movie of mine: "Let me 'splain... No, there is too much. Let me sum up." Microsoft has their long-term planning blinders on, and it is hurting them as a company. I know it is difficult to plan more than 5 years out for any company, but Bill Gates had this great vision of putting a PC in everyone's home when he first started Microsoft. He worked exceedingly hard (and in some cases, borderline destructively so) to achieve his goal. What is Microsoft's long-term goal today? To make a bunch of money? To keep making the upteenth version of Windows? Google and Apple both seem to have realistic, but difficult to achieve long-term goals that will satisfy customer wants. What is Microsoft striving to achieve for me, the customer, these days?