Microsoft R&D and basic research
Paul Kedrosky: “At yesterday’s Microsoft analyst day in Redmond the company’s Craig Mundie put up a figure comparing cumulative R&D investment by major tech companies since 2000… [The figures show] a huge gap, with Microsoft outspending most of its competitors, including IBM, and massively out-spending arch-nemesis Google.”
Paul goes on to state that many shareholders might be unhappy or concerned that Microsoft “spends too much”. Others in the blogosphere are commenting that the figures aren’t correct, other companies conduct their research more efficiently, etc. I’d encourage the commenters to think about another factor related to the R&D spending numbers.
Microsoft and IBM have been leading our industry in “basic research” for some time. And the reason for this is quite simple- Microsoft and IBM are two of the largest and most diverse technology companies in the industry and have been for a number of years (IBM much longer obviously). Both companies have taken it upon themselves not only to develop new products or incubate new technologies but also to conduct basic research. As described in Wikipedia, basic research ” is conducted without any practical end in mind, although it may have unexpected results pointing to practical applications. The terms “basic” or “fundamental” indicate that, through theory generation, basic research provides the foundation for further, sometimes applied research. As there is no guarantee of short-term practical gain, researchers often find it difficult to obtain funding for basic research.” Of course not all research is basic or pure, but based on the definition it is easy to see the importance of this kind of research to lay a foundation for future discoveries of applications.
Several years ago, I debated this topic with Dare Obasanjo on Brad Wilson’s blog (I didn’t have my own blog at the time and at this point can’t find the link anymore). Now that I work at Microsoft and I’m a little older (and hopefully wiser), I realize that I was wrong and Dare had some great points. At the time, I was arguing that Microsoft’s R&D should be seen as productive in the near-term based on recent product developments, and Dare responded that in some of the products I cited that there was really very little connection to Microsoft Research output. This of course is the case in the research efforts that are aligned with basic research. My point here is that you can argue about whether or not Microsoft should invest in this kind of research, but we do and many other companies don’t. And you can argue about whether or not it is a business advantage to do so. Personally, I think it is. What is clear is that we’re investing more in research into new technologies than many competitors and all things being equal should have a greater opportunity to discover new technologies and apply them than will our competitors.
Through Microsoft Research, there are technology developments being explored that may not have a practical application for many years due to hardware, bandwidth or other environmental constraints but will radically change the industry one day. This kind of innovation is not possible without basic research and a strategic outlook- many companies wouldn’t invest in this way if there isn’t a short term return. Some research efforts will have a near-term impact and will become tied to major products like Windows or Office or other services. Some research efforts will have little impact and that’s the nature of research. Sometimes you come up empty. It is also likely that many external observers will never fully understand the contribution of the research efforts and how those are finally manifested in products. And yet the research effort keeps going and our customers will get the benefits. I think if people consider all of these factors that they’ll better understand our message around research and the company’s positive outlook.
