It looks like another analyst out there agrees with me in that Microsoft needs to learn to innovate! (There are probably hundreds of other analysts who believe they do, but this guy published it). Sid Parekh, an analyst at McAdams Wright Ragen wrote in a research note 4 steps that Microsoft must take to improve their business. They are as follows (thanks to Barron's Tech Trader Daily):
I completely agree with all four of these points. Although, none of this should be news to anyone really. The thing is, unlike many other companies that I complain about, I truly believe Microsoft can pull it off. They've shown that they are able to adjust to different times and markets, proving us all wrong with their gaming division (Xbox 360). And the truth is, although everyone seems to want to work for Google, a lot of the best recruits go to Microsoft for the prestige, experience and perks. I am personally kind of glad this whole Yahoo debacle hit the stock like it did, because when Windows 7 comes out corporations will finally switch from their old Windows 2000, or maybe even XP machines and revenue will begin to pour in.
- Innovate! “Multi-year investor concerns about the company’s ability to innovate have only increased in recent times,” he writes. “Outside of the “Surface” product, we have seen little from the company that could be labeled as being truly innovative. Innovation is key in boosting opportunities for Microsoft and in its battle against threats from Open Source software, SaaS, Online Advertising, Apple, Google, etc.”
- Stop taking the iterative approach to product development. He asserts that “the ‘Hey, that was only Version 1′ approach to building software and products is ancient and creates a flood of unwanted negative publicity – Zune 1.0, Vista/SP1 are just some examples.” Parakh says that a key here is “a flawless user experience the first time any product is launched.”
- They need a new branding strategy. “The use of Microsoft and Windows for corporate products is fine,” he writes. “However, anecdotal conversations with multiple individuals reveals that the use of Microsoft or Windows while branding consumer focused products increases the likelihood of a negative perception of the product (even if unwarranted), thanks to the immense negative publicity (news media, Mac/PC ads) received over the last several months and years.”
- 20% time? “Microsoft also needs to be nimbler in responding to the competitive environment and provide increased latitude for employees seeking to innovate.”
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