Although some wags may wish to claim Microsoft does not innovate, that is not at all true. Microsoft does innovate, but not always successfully. There are two reasons I have noticed for this.
The first is that they have a large installed base and a large market for upgrades that they are always trying to protect. that means they don’t want to innovate in ways that endanger their “cash cows”, which are Windows, and even more so, Office. And if you have read the classic work The Innovator’s Dilemma, by Clayton M. Christensen, you will recognize that this sets them up for an eventual fall when a disruptive innovation comes along. In fact, Windows is probably facing a disruptive innovation in the form of mobile, particularly tablets. And what is ironic about this is that for years Microsoft was the main and seemingly only promoter of tablets. Why did they get into this situation? Because they wanted tablets that fit into their paradigm of the Windows computer. And in the other part of mobile, the cell phone market, it is clear that Microsoft is at best the third horse in a two horse race. Yet people who have used the latest Windows Phone 7 say it is slick and matches up well with iOS and Android.
But when their backs are to the wall, they can certainly innovate. An early example of this was in Web browsers. When Mark Andreesen incautiously declared that Netscape’s ambition was to replace the OS, Bill Gates was able to turn Microsoft around fairly quickly and produce a better browser. They also engaged in anti-competitive and illegal practices, as determined by a U.S. Federal Court, but we should never lose sight of the fact that by the time of IE4 Microsoft was offering a better browser than Netscape. The problem is that once they had dispatched Netscape the whole browser operation seemed to go into hibernation. This let Netscape’s successor, Firefox, come along and grab both market share and mind share. And since then Google Chrome has looked likely to overtake both of them. This threat has stimulated innovation again, though whether it is too little, too late is a major question. But IE9 is a credible alternative to Chrome and Firefox, and is notably standards-compliant.
One of the big problems Microsoft has is that it does not know how to sell the idea of its software innovations very well. The joke about this is that if Microsoft went into the sushi business, they would market their product as “cold, dead, raw fish”. Mmmm, yummy.
What brings on this observation is that Microsoft has what may be a genuinely innovative and useful product that almost no one knows about, and that is Sharepoint. This product is something that aids collaboration, is business-oriented, and can tie together a lot of separate products. It could be connected to all of Office, including Outlook, to create a product that wold get Microsoft back into the mobile/tablet market successfully. Right now iPads, and increasingly Android tablets, are coming into business environments despite being completely unsuited to that task. Microsoft is an Enterprise computing vendor that should have all of the natural advantages here, but it looks like they will give away this market through inaction.