Good thing! For a while there, Microsoft was barely doing anything to excite people.
The reason Microsoft lost its mojo? It was being hounded by the anti-trust cops between 2004 and 2007, says Jefferies analyst Katherine Egbert. During that period, it racked up ~$2.5 billion in fines.
For the 2005 fiscal year, R&D spending as percentage of revenue dropped 22% year-over-year. Between 2004 and 2007, Microsoft’s R&D as per cent of revenue fell below 15%. The average R&D as per cent of revenue for the software industry is 16%.
With anti-trust issues in the rearview mirror, Microsoft is raising R&D spending. It can revert to its old-school strategy: Follow someone else’s lead, then decimate them, says Katherine.
Of course, the world after 2004 looks a lot different than the one before it. Apple is fast becoming the most important mobile company in the world. Google owns search. Facebook is the new home on the Web.
Further, Google and Apple have pockets almost as deep as Microsoft, meaning it’s far from a sure thing that Microsoft’s old playbook will still work.
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