The Massiveness of Microsoft

I’m clearing out The Stack, and here are a couple of nuggets from the December 2004 Fast Company I’ve been meaning to blog about.  The article focuses on Innovation (and the perceived lack thereof) at Microsoft

  • Venture capitalists typically look at 50-100 deals to find a good $20 million investment.  Microsoft, with its $6.8 billion R&D budget, would have to cover some 35,000 ideas to keep on the same pace.

  • Google’s $1.5 billion in revenue would lift Microsoft’s top line by just 4%.

  • In the software industry, a research project is considered successful if it produces 10-15% annual revenue growth.  By this standard, Microsoft would have to create the third or fourth largest software company in the world each year to be considered innovative.

  • From its $37 billion in annual sales, Microsoft generates $9 billion in cash flow and $8 billion in profit; that’s twice as operationally efficient as GE and better than twice as profitable as IBM.

  • Microsoft spends $6.8 billion each year in R&D.  IBM spends $5 billion.  The annual R&D budgets of Oracle, HP, Dell, Apple and Sun combined are less than Microsoft’s.

That’s big.