What's Wrong With Microsoft?

Did you know that Microsoft has higher annual revenues at $62.48B than Apple ($57.09B) and Google ($26.21B)? More surprisingly, they also have higher profit margins at 30% compared to Apple's 21% and Google's 28%. And, to cap it all off, Microsoft is sitting on a bigger pile of cash with $36.56B compared to Apple's $24.29B and Google's $30.06B. So what the heck is wrong with Microsoft?

Looking at just the numbers it seems as if Microsoft could have simply outspent the competition and prevented Apple and Google from becoming such formidable threats. Yet, Microsoft's value has grown just 16% since August 2004 (Google's IPO) while Google has grown 450% and Apple an amazing 1,200%!

The problem lies deep internally and it will take more than piles of cash to fix it. Microsoft has one of the most advanced research labs staffed with some of the most brilliant minds in the world. It introduced us to tablet PCs and eBooks about 10 years before the Apple iPad and Amazon's Kindle. Microsoft suffers from what many large successful companies faced in the past. Remember Xerox? Corporate politics and egos slow development down to a point where they are constantly forced to play "catch-up" or, even worse, potentially game-changing technology never even make it to market. Check out this article from the NY Times from earlier this year that details some of these struggles at Microsoft.

So where will Microsoft be 5 to 10 years from now? Are partnerships with Apple and Facebook Microsoft's answer as O'Reilly suggested in his article?