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General Software Discussion / Re: Angry shareholders say Microsoft squanders billions on pointless R&D projects
« Last post by Dormouse on February 15, 2009, 06:35 AM »Expenditure on R&D is about the only way to ensure longevity.-Eóin (February 11, 2009, 07:10 PM)
To the extent that this is true, investors are still left with the problem of deciding whether the R&D is going into a bottomless pit that will never produce anything worthwhile or whether it will pay off in the end. History shows a lot of big and very profitable (at the time) companies developing vanity R&D progs that seemed to add to their prestige within the community but never developed business gains in the end - and those companies eventually shrinking as their cash streams dried up. Investors are very aware of this and alarm bells ring if they see a company of this sort with high R&D - their problem is that they very rarely have the info or expertise to know if the R&D being done is really targetted at the medium/long-term interests of the business.
In practice, one of MS's most common strategies has been to buy in new companies and technologies rather than develop its own, and most of its profits have come from establishing and exploiting monopolies. And a fair bit of the development in its own products has come from copying ideas from competitors.