Pip believes Gates' announcement is bad news for Microsoft (MSFT), because even though Gates doesn’t “get it” right now he is the only person who could make the company turn on a dime if he ever did “get it” - that is, what Microsoft needed to be on top again. We particularly liked his explanation of Microsoft’s overspending on R&D, which we consider significantly more eloquent than our own.
Microsoft spends 16% of sales on research and development, compared to Apple’s 4%—and most would say that Apple has gotten more innovation for its comparative scant few dollars. Apple tends to surprise with products out of skunkworks, while Microsoft misses dates by a wide margin. Microsoft still seems addicted to countering criticisms of its lacking innovation for its monopoly power with a rebuttal that it spends more money on R&D than all other software companies combined—even though it hasn’t delivered results to Earthlings.Money doesn’t buy love or effective software development. If you want a ditch dug faster hire extra bodies, but not so with software development.
MSFT 1-yr chart: