| Pilot Fish Are Watching |
28 July 2003
|
Microsoft Thinks Recovery Coming
Microsoft announced last week that it planned to hire 4-5000 new employees, most of them in the US, and
to boost its R&D budget by 8% while holding onto its $49 billion pile of cash. The quality of Microsoft
products may be debated ad infinitum, but the business acumen of the top people cannot be.
They are exceedingly good at making Microsoft shareholders money. So, some tea-leaf reading is in order
based on these snippets of information to see what they see in the economy.
Most obviously, they see a need for more, not less. In a contracting economy, the prudent business
leader battens down the hatches. Microsoft is not doing this, rather it is hoisting its sails. Deductively,
they expect an improvement in their business.
However, they are spending a significant amount on R&D, meaning that what got them this far won't
carry them much farther. The computer business seems to move in quantum bursts rather than in steady
trendline progressions. That being the case, this R&D is to be spent searching for "The Next Big Thing"
[NBT]. The last such beast was the graphical browser from Netscape, not Microsoft, about a decade ago.
That's where the $49 billion comes in. Microsoft is ready to sell the world on the NBT, and if the 8% R&D
boost doesn't create it at Microsoft, the cash will come in handy in buying the new invention.
What this means for other companies in other industries amounts to very little, except to say that
Microsoft suspects that there is money to be made soon, and it justifies new staffing, new investment and
hanging onto cash. Others may wish to plan accordingly.