There’s been plenty of speculation today about who Microsoft (NASDAQ:MSFT) ought to buy now that its discussions with Yahoo (NASDAQ:YHOO) have again come to a halt. I wrote a post earlier about the notion that they might buy AOL; but you can also imagine deals for Facebook, or Ask.com, or a zillion other Web properties.
In a research note today, Sid Parakh, an analyst at McAdams Wright Ragen in Seattle, came at the question of what Microsoft should do next with an entirely different approach. He addressed how Microsoft needs to change its whole approach to doing business.
Here’s his four-part plan for energizing the company:
- Innovate! “Multi-year investor concerns about the company’s ability to innovate have only increased in recent times,” he writes. “Outside of the “Surface” product, we have seen little from the company that could be labeled as being truly innovative. Innovation is key in boosting opportunities for Microsoft and in its battle against threats from Open Source software, SaaS, Online Advertising, Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), etc.”
- Stop taking the iterative approach to product development. He asserts that “the ‘Hey, that was only Version 1′ approach to building software and products is ancient and creates a flood of unwanted negative publicity – Zune 1.0, Vista/SP1 are just some examples.” Parakh says that a key here is “a flawless user experience the first time any product is launched.”
- They need a new branding strategy. “The use of Microsoft and Windows for corporate products is fine,” he writes. “However, anecdotal conversations with multiple individuals reveals that the use of Microsoft or Windows while branding consumer focused products increases the likelihood of a negative perception of the product (even if unwarranted), thanks to the immense negative publicity (news media, Mac/PC ads) received over the last several months and years.”
- 20% time? “Microsoft also needs to be nimbler in responding to the competitive environment and provide increased latitude for employees seeking to innovate.”