Yesterday’s customers

Adam Hartung recently wrote about the costs involved in essentially defending the status quo. In the below chart it clearly shows Microsoft investing significant R&D funds and getting little return.

Chart from Business Insider:

RD cost MSFT and others 2009

In our world view this is clearly a case of a inwardly focused culture that has lost touch with the market and its customer base. The only way to grow is to attract more customers, sell existing customers more or provide more value you can capture with higher prices. It appears that Microsoft is continuing to serve yesterday’s customers, when there was really only once choice for office productivity software. As markets have opened up, Microsoft has been left behind relying on its old formula for success.

Now there is no question  the investments Microsoft has made has ensured the survival of its core business to date. But the question remains where is it heading? With the shift to the cloud and free applications and services online and the rise of streamlined coding and simplified products (think 37signals) how much value can be added to word processing, number crunching and presentation software?

Clearly its time to do something different but can it unlock the shackles of its corporate culture and connect with the next generation of customers?

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