There was a time when you could argue that very few innovations actually originated within Microsoft. The company’s brilliance was to roll them into its operating systems and drive their popularity. The mouse, standardised tool bars and spreadsheets were all developed somewhere else first. Those ‘bundling’ days, however, don’t stand the test of time. Changes in the way technology works mean that Microsoft is initiating a fundamental overhaul of its business practices, in order to move its existing computing platform, which currently resides on desktop PCs and servers, to the internet.

Microsoft is reacting positively to the challenge. That said, like other large companies, it has an established culture and entrenched interests which means the spirit of Open Innovation does not come naturally. There is a need to move from the era of secrecy surrounding software codes to a more open word of sociability and collaboration. The continued threat of litigation and the obvious success of Google, IBM, and Sun Microsystems in encouraging others to build software and services that fit with their own, provide strong incentives to do just this. Microsoft’s new internet platform will rest on a mix of hardware, for which it doubled its data centre capacity in 2007, and software, by which it means storage and processing services delivered over the internet. In the meantime, consumers will see new services as it extends its computing platform to the internet through a ‘device mesh’ which will provide a way for consumers to link all of their computing devices over the internet so that personal data can be accessed from any of them.

From a strategic perspective Microsoft aims to lead and license technological solutions that become partner and sector standards. To help secure its future it leverages its corporate research labs around the world to link into emerging developments and effect fast technology transfer into the core business. Much initial focus has been on the established areas of the Microsoft empire with Vista and Office 2007. While this has met with limited success, the recently launched new X-Box game Halo 3 has, by contrast, lived up to expectations and, on its first day of sale, secured $170m in the US alone. Hits and misses are symptomatic of an innovation engine the size of Microsoft’s. In other sectors the misses go unnoticed but not here. Given this, it is a notable achievement that Microsoft continues to grow in such a sustainable manner – and this is increasingly due to its hits. Microsoft’s scale has not prejudiced its ability to innovate. In the arena of large company innovation, Microsoft is one of the few organisations that has proven it can deliver successfully despite its size and diversity.

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