Place your bets on research

No reason to sugarcoat the Microsoft quarterly financial report issued this afternoon: it reflected the bad news in the overall economy.  Revenue down, earnings down, profits down. 

What I did find most interesting was the silver lining as Business Week points out in its coverage. Like most of Wall Street apparently (MSFT stock rose in after-hours trading), Business Week was impressed with some of the positive steps taken by the company:

Maybe the most striking news is Microsoft’s crisp cost-cutting. Who knew this Midas of the computer industry knew how to scale back so well? In the quarter, administrative costs fell by more than $1 billion, from $2.3 billion to $913 million. And the company completed its first ever general layoff, of 5,000 people. The company did not cut into its R&D budget, however. Spending there rose from $2 billion to $2.2 billion.”

It’s that last point that I’m focusing on, as it demonstrates that the company is living up to CEO Ballmer’s pledge to increase our annual R&D spending – amid this deep recession – from $8 billion a year to over $9 billion.

At a time when most budgets are hurting, that’s quite an investment.  If you’d like to know what we’re getting for that, check out http://research.microsoft.com, or for the most up-to-date reports, use Twitter to follow @MSFTResearch – this week, the Twitter feed has focused on papers and demonstrations we’re presenting at the 18th International World Wide Web Conference (WWW2009).

Email this post to a friend

Amazon and Microsoft Intersect in the Cloud

So today Werner Vogels, the much admired CTO of Amazon, has a post over at “All Things Distributed” which directly exemplifies his blog’s subtitle (“building scalable and robust distributed systems“).  The post is “Expanding the Cloud” and describes today’s announcement that Microsoft Windows Server is available on Amazon EC2. As he sums it up, “We can now run the majority of popular software systems in the cloud.”

This means two things.  First, we were able to con cajole convince Amazon essentially to host a beta test for something big, which will indubitably become much, much bigger.

Is It Even Possible to Connect the Dots?

FACT: Among the inspired ideas of polymath Danny Hillis (pioneer of parallel computing) was establishing the Long Now Foundation, whose projects include the millennial Long-Now Clock (“the world’s slowest computer”) and the notion of “Long Bets.”  A Long Bet is an “accountable prediction,” meaning one that has a specified end-date and a testable, wagerable, proposition.  One of the early Long Bets posted wagers $2,000 that “By 2020, no one will have won a Nobel Prize for work on superstring theory, membrane theory, or some other unified theory describing all the forces of nature.”  That particular bet is one of many signs of scientific skepticism about string theory.

ANALYSIS: Even without the ease of hyperlinks, old-fashioned newspapers foster serendipitous connections between articles, particularly if you’re reading a Sunday morning paper with lots of sections. Sunday the Washington Post did me a service by placing in different sections a couple of articles which I connected, about intelligence “failures” and about stock-market prediction, leading me to some web-surfing about the questionable validity of string theory and some related observations about the difficulty of predicting human behavior.

In the Outlook section, the Post has an opinionated and thought-provoking op-ed piece by Mark Lowenthal, one of the most “intelligent” individuals in the recent history of the U.S. intelligence community (after all, he was the 1988 Jeopardy grand champion, as well as a former assistant director of CIA).

How Not to Predict Stock Performance

Google hasn’t had a great week on the stock market so far, but it isn’t often that you get to use the words “Google stock” and “kick ’em while they’re down” in the same sentence, so…

I like my own little subtle “inside jokes” a bit too much sometimes. If you’re sharp-eyed you’ll have noticed that on the left-hand margin, down a ways, is an RSS feed featuring the latest news stories which include the phrase, “the next Google.” Yes, I use Google News itself to drive the RSS feed, ha ha.

The Three-Way Race, in Politics and Search

On the eve of the Super Tuesday primaries I’ve noticed a small but curious synchronicity, a sideways rhyming, between the Microsoft – Google – Yahoo elephant dance, and the back-and-forth among the top remaining candidates on the Republican and Democratic sides in the presidential primaries.

In graduate school I once wrote an 85-page study of “The Strategic Triangle: U.S., Soviet, and PRC Realignment during the 1970s.” Ah, the good old days of Henry Kissinger and grand-game geopolitics. But let’s stick to the more prosaic cage match dominating our politics right now.  Last week, John Edwards finally dropped out (or “suspended” his campaign, preserving some shred of pre-convention viability I suppose), and in doing so he refused to endorse either Barack Obama or Hillary Clinton. Both campaigns said great things about Edwards *after* he left the race, of course, the better to woo his supporters.  But before he dropped out, while he was still showing up in debates, both Clinton and Obama (and their surrogates) showed quite a bit of peevish annoyance that the third-place fellow wasn’t giving up and tossing them his endorsement.

Similarly, Mike Huckabee is hanging on by a thread on the Republican side, to the great solace of John McCain and the fuming of Mitt Romney, the latter believing that Huckabee’s conservative supporters would line up with him in a binary choice between Romney and McCain. (Would that count as a Baptist-to-Mormon conversion?) Romney spent the weekend bashing Huckabee even more than his putative rival, McCain.  Triangulation and frustration boil over into a combustible mix, obviously.

The same combination appears to be brewing in the Googleplex, while investors and analysts dump on the once shiny GOOG, which tanked yet again today, dropping below $500. 

A Quick Long-Term Analysis of GOOG, YHOO, MSFT

Fact: According to Forbes, writing after yesterday’s close of trading, “Unable to topple Google on its own, Microsoft is trying to force crippled rival Yahoo into a shotgun marriage, with a wager worth nearly $42 billion that the two companies together will have a better chance of tackling the Internet search leader…. Microsoft’s $31-per-share offer represented a 62 percent premium to Yahoo’s closing price late Thursday, although it’s below Yahoo’s 52-week high of $34.08 reached less than four months ago.”

Analysis: Most of the buzz about the Microsoft-Yahoo commentary yesterday was simply noise, bleating about the immediate impact (or not) on Google, as if the salience is a snapshot rendered in instantaneous who’s-up-who’s-down.  Yet I had a reader comment yesterday very perceptively on my post, saying “Whether the deal is timed well, overpriced or not, is for time to decide. Which may even take a couple of years!”

That got me to thinking about the value of these three companies over the long-term looking back.  Thanks to the web that’s easy to quantify, at least in terms of stock price; you can do it at MSN or on Yahoo Finance, but just for grins let’s do it at …

Short Google

I’d like to go on record with a date-stamp and predict that Bill Gates has begun a successful counter-revolution. I’d bet on MS, not Google. When I visited the Googleplex HQ in 2001, the foosball tables and personal chefs already gave an air of dotcomdom…. the ensuing years and successful innovations at Google notwithstanding, I’d bet corporate rigor and stamina over “Do no evil” every time. And until I see corporate rigor in Google, they still have some flame-out possibility….

In the meantime, we’re keeping a very open mind, on Google Earth (evaluating it alongside ESRI’s competitor ArcGIS Explorer and MS Live MapPoint) and on Google search applicability. There’s a lot of capability driven by metadata-tagging that can’t be done just with search.