Cash Cow Disease: The Cognitive Decline of Microsoft and Google. ⇒
20 December 2010, mid-morning
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I dunno about this. I think it would be one thing to complain about lack of “discipline” in cash-cow companies — if, for example, MS or Google was to do something actively wasteful like, I don’t know, leave the lights on all night. But to say that prototyping new products is “wasteful” is another thing entirely. It’s as if he believes that Windows, Office, Google Search are products that sprung fully-formed from the ground and someone with a crystal ball went around plucking them from amongst failed-products-to-be.
I see these cash cows as just a convenient income stream for these companies to develop new, potential, products. He talks about returning profits to shareholders, but by his reasoning, there shouldn’t be any shareholders anywhere — those people should sit on and enjoy their piles of cash, not “waste” it by investing in companies that might fail.
by Weiguo on December 20 2010, 12:16 pm #
I thought his arguments seemed a bit too “the free-market will fix everything”. I think his overall argument is that companies like Google and Microsoft have too big a cushion of money that insulates them from having to be creative and innovative with their R&D. Well, it’s mixed in with a bunch of other junk, anyway.
by ramanan on December 22 2010, 9:25 am #
yeah — that’s why I thought his points were weird. I actually think that Microsoft and Google have the luxury of not having to innovate conservatively, since they have the cash to throw at weird projects. Was Google Wave useless? Sure. But you need to try weird ideas to truly innovate. Google Search’s approach seems obvious now, but it probably seemed a silly throwaway idea to others at the time.
by Weiguo on December 22 2010, 3:38 pm #
Innovation is about trying a lot of things. Some of them work, some of them don’t. Recognizing that and adapting (e.g. Wave) is a valuable skill.
The author of the post doesn’t seem to write very coherently and they resort to using using loading terms. i.e. Instead of saying “20% time’ is a “waste time”, you can spin it the opposite way call it “innovate” to reach an entirely different conclusion.
They don’t have any facts (recall that Microsoft did in fact pay out a $32-billion lump sum in 2004 with a $3/per share dividend).
But they really don’t understand the business space at all or what either Microsoft or Google are trying to achieve. Android is activating 300,000 new phones a day. That’s more than 100 millions users a year. Certainly, it’s far from perfect, but something with than many users is one of the biggest products in the world. How many other companies have a product like that? It’s certainly not “lack of discipline” nor failing the “marketplace test”.
Plus, since the author all “free-markety”…I’d say Wall Street, i.e. the shareholders, are making it clear that they like Google’s direction and business management – the stock has doubled in the past 18 months.
by Ryan on December 22 2010, 7:01 pm #