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July 24, 2004

Microsoft's change in strategy

Microsoft's decision to return $32 billion to its shareholders may be a wise business move, but it is also an admission of defeat. With its announcement this week that it will pay a special one-time dividend of $3 a share, the company is confessing that despite years of trying, it has not found an attractive way to invest its cash reserves. After decades of spectacular growth, the world's most famous software company seems resigned to a more sedate middle age. [NICHOLAS G. CARR, author of Does IT Matter? Information Technology and the Corrosion of Competitive Advantage, writing in the NY Times. Thanks to ./ for pointing it out.]

This seems to me to be a completely irrefutable and illuminating observation.

I originally said more here, but I decided it probably wasn't worth saying without spending more time justifying my points than I have right now.

The author goes on to conclude:

Software companies are smart and inventive, and they will continue to come up with new, if ever more specialized, products. The industry will remain a large and important one, but it seems fated to resemble more and more a traditional, mature sector like manufacturing. It is no longer unthinkable to say that software's glory days lie in the past, not the future.

But Microsoft has never shown expertise at innovating. The more logical conclusion to Microsoft's giveaway is that they don't think there is anything out there now that they can spend a lot of money copying and make a profit from. That could well be true. We may be in a period now when the rate of new technologies being generated has slowed down considerably, as it had in 1899, when Charles Duell, the US Patent Commissioner, who in 1899 proposed shutting down the Patent Office on the grounds that "Everything that can be invented has been invented." But in 1899 the world was simply waiting for a few key enabling technologies -- for instance the Wright Brother's first powered flight was just 4 years away. That may be the situation in the software world now -- what comes next may be so different from the applications that are prominent today that it may simply be unimaginable to the Old Guard.

July 24, 2004 in Web/Tech | Permalink

Comments

Do you have the link to the article??

Posted by: Ben at Jul 26, 2004 1:01:28 AM

Duell never made any statement that "everything that can be invented has be invented". While the alleged statement makes good fun of predictions that do not come to pass, it is none the less just a myth. For more infomation, see:

http://www.ideafinder.com/guest/archives/wow-duell.htm

Posted by: Sante at Apr 28, 2005 5:18:09 PM

Thanks for that correction. The apparently mythical quote is all over the web; for instance here. This is the first I've heard that it isn't true!

Posted by: Gary Robinson at May 6, 2005 2:32:08 PM

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