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The original AT&T was an official government monopoly so the very existence of Bell Labs was in part a tax it payed to avoid problems. As I recall it also wasn't allowed to do things like sell UNIX(TM) for serious money prior to the United States v. AT&T 1982 consent decree ... which I notice is the same year UNIX System III was released.

Xerox, though ... well, a good book on that is Fumbling the Future: http://www.amazon.com/Fumbling-Future-Invented-Personal-Comp... ... which is still in print after it's 1988 debut.

That isn't even an example of disruptive innovations almost never happening in established companies, Xerox just wasn't doing that sort of thing to begin with. Well, they bought Scientific Data Systems at the top in 1969 and fumbled that by the middle of the '70s....

"Redmond spends more on R&D than Google and Apple combined. Think about that the next time someone tells you Microsoft doesn’t have a future."

Two words, Xerox PARC.

At Sun there was a weird joke that Sun Labs was where good ideas went to die. It was frustrating.

The point here is that good R&D is a necessary but not sufficient component of innovation, the second is a willingness to productize your work. Strangely the hardest thing about that is not making a product out of it, the hardest thing is making a product you can ship.

Good R&D isn't constrained, which is to say that you don't tell the folks doing the research you are only researching things we can sell for a profit, but that is a constraint on products. What happens is the 'Apple effect' where you have a bunch of researchers who can't make a profitable product (Xerox Star) and then a product guy comes along (Steve Jobs) who sees the essence of the innovation, and can strip away the parts where it goes too far and ships that.

Its really challenging to build something close to your vision and not ship it, it seems like it is impossible to build something that is close to your vision and then ship something only half as close as that. But that is where the success can be. "Fumbling the Future" [1] is a fascinating read for that reason.

[1] http://www.amazon.com/Fumbling-Future-Invented-Personal-Comp...

⬐ aristidb

Another example: Nokia. Right before the iPhone was introduced, Nokia's R&D budget was _huge_ compared to Apple's. I guess that proves that Nokia is more innovative than Apple?

⬐ wisty

http://www.asymco.com/2011/02/04/nokia-employs-as-many-engin...

Nokia developed HW, Symbian, S40, MeeGoo, and services. It also spent a bit on actual research. Pure research often pays off (in unpredictable ways). Developing a number of platforms turned out to be a bad idea.

⬐ timthorn

Of course, Symbian wasn't created by Nokia, and MeeGoo also relied on Linux.

⬐ meaty

Well Nokia bought Symbian from Psion...

S40 is still their monumental achievement:

http://m.bbc.co.uk/news/business-16712308

⬐ hnriot

You seem to forget that cellphones are actually phenomenally complicated pieces of RF engineering. It wasn't Apple pioneering how to make that all work. People seem to forget now that Phones aren't just computers. That miniaturization was rf technologies was, in part, thanks to Nokia who were getting people talking without wires long before Apple decided to think about phones. While Apple as a company pre-dates Nokia by I suspect something like a decade, back then Apple were focused on getting spreadsheets working.

⬐ vardump

http://en.wikipedia.org/wiki/Nokia - they've been a corporation since 1871. They developed their first mobile phone network system in 1971, ARP. It had 100% countrywide (Finland) coverage in 1978.

⬐ lebski88

> While Apple as a company pre-dates Nokia by I suspect something like a decade

Actually Nokia date back to 1865 but they originally a wood pulp mill then rubber manufacturer. They got into electronics in the 1960s and focussed on phones from the 1990s.

⬐ RandallBrown

Actually, Nokia has been around since 1865.

⬐ jacobwil

Nokia as a company has existed since the 1800s and first released a mobile telephone in the 1960s. Apple was incorporated in 1977. Motorola is the company that came out with the first handheld mobile phone in the 1970s.

You have made sweeping and broad overgeneralizations that betray the complexity of the situation. Apple's masterstroke was not in inventing the concept of a smartphone, but in producing one that provided a much better user experience that the rest of the market. As for the differences in hardware and rf engineering, I'll leave that to someone more qualified to explain because my knowledge in the area is far from complete.

⬐ notatoad

>the second is a willingness to productize your work

not just a willingness to productize, but the ability to do it successfully. Kinect, for example, is obviously a huge technological accomplishment that is the sum of a ton of research and the work of many smart people. but it's just a gimmick for a game console, that many gamers are pretty ambivalent about. I can't help but think it's a bit of a waste of talent.

⬐ chucknelson

Well, there were a TON of Kinect units sold, and its initial incarnation in the game console space could lead to some innovate interfaces for computers in general (or whatever else) one day.

I'll be interested to see if there has been much improvement in the technology when the next Xbox launches this fall.

⬐ sytelus

There is a theory why many of these companies have/had huge R&D budget. These companies typically have insane profits. When you have that level of profit you get tremendous pressure to give it back to shareholders via raising dividends. Plus there are increased taxes. From company's perspective that's "throwing away" a lot of many. So you need to spend it out and keep your "net" profits low.

This is the core dynamics behind lot of large companies with gigantic R&D without focused goals. And it also very well may be the reason why they contribute marginal to company's bottom line and still stay alive year after year. Like Nokia's R&D they are usually first one to go as the company's revenue starts declining.

⬐ allertonm

See also Apple "Advanced Technology Group", pre-1997. One of Jobs' first acts on his return was to kill it. I remember all those cool demos we used to get at WWDC of things that never ever saw the light of day while the core OS was turning to crap.

⬐ yardie

To be fair to Jobs, he came into Apple and had a really short amount of time to turn it around. I believe they had something like 2 months of available cash. And their stock was in the single digits. He shut a lot of things down; if you weren't making money (ATG, Newton, and the consumer products) you were gone. He also cut off charity and left it to Cook to re-implement it.

This is why I believe Apple are holding onto so much cash. Far easier to ask banks for million dollar loans when you have billions in savings rather than begging private equity who'll strip you to pieces.

⬐ tlogan

Actually, the problem with Microsoft is not their R&D. If they stop spending on R&D, Microsoft will still have the same set of problems. Killing R&D will not help anything.

It seems like their problem is that actually that they are not bold enough to push some of their research ideas and prototypes to the market. Why do they need to copy Apple or Google in order to succeed in mobile market? Why not to do something bold and push it?

⬐ hackinthebochs

Isn't that what they're trying to do?

⬐ MaysonL

Well, given that Xerox PARC came up with the laser printer, and Xerox and people they've licensed their patents to have sold millions of laser printers, I'd guess that PARC paid for itself many many times over. Not to speak of the fact that most of Apple's products seem to be implementations of ideas from PARC.

⬐ acchow

Also, let's not forget that Google's core products push the web (and technology) forward, whereas Microsoft is primarily enterprise-focused. Since R&D is defined as the development of new products and creating new knowledge, Microsoft would have to spend approximately the equivalent of Google's entire $30bn budget to be operating at the same frontier.

⬐ Tloewald

Exactly. Just look at all the "cool stuff" Apple worked on in the early 90s (OpenDoc, Taligent, Kaleida, ScriptZ, QuickDraw 3D, Apple Telephony...). Giving those as examples of how great Apple was doing back then would be about as cogent as this article.

⬐ rjzzleep

yeah xerox parc is exactly what i was thinking when i first saw microsoft research a while back. huge funding wonderful projects, but the products that microsoft hugely pushes in the enterprise and tries to make money with is their utterly shitty enterprise stack.

meet dynamics crm, sharepoint, biztalk et al. (and f*in shoot yourself)

⬐ pron

AFAIK, Microsoft Research and IBM Research, unlike Google Labs, do not operate with the clear intent of ever productizing their work. What they do there is much more similar to the work done in universities.

And if Microsoft Research is like IBM, then it's also only partly funded by the corporation, and regarded as a semi-separate entity. I think they see it more as a contribution to science and as a long-term investment rather than product research.

⬐ Nelson69

Actually, IBM walks a tightrope. They want research to be free to do research and there is a certain amount of freedom you have to give them but they also have quite a record of saying the best research results in products. They also, when the research falls in to a greyer area, have let a lot of it go and many times other companies have started up around some of their stuff. The thinking being that a healthy industry is good for all companies, including IBM and research is part of that. Never mind the stuff they've documented in journals over the years... Some of the materials work IBM does is closer to pure research and starts to look like long-term investment type stuff but make no mistake, there are problems they are looking at which the company plans to profit from the solutions.

MS seems to have some other problems, productizing their research is part of their problem, in which case they are likely spending way too much on it. Another, I'm gonna go ahead and say it since it keeps coming up here in different capacities re: IE10 and Windows 8 and other things, they have negative brand equity with the real early adopters and leading edge geek folks due to their years of treachery and just not being nice. While kinnect is cool (very very cool, my 2 year old can play games!) I think I'll wait for Google and Apple to solve the wearable ultra personal computer problems before I'd let MS in to my personal space with some of those phone gadgets. Their final problem, IMO, they still sort of don't get it. Take JPEG-XR, it's a nice piece of work, they even played nice with ISO and it's a standard of sorts; good on them for it but why no BSD or Apache licensed free implementation with a written down patent promise? They planning on drawing funds off that patent? Or would they like digital cameras to start using that stuff? Mono is nearly 8 years old and it's sort of used but largely ignored due to MS and potential patent problems, I think they are very solvable problems. They just don't play well with a lot of others and that kind of undermines the research, it doesn't matter how cool the invention is if you have to eat the rest of their shit with it.

⬐ pron

Yeah, well, no one is saying MS and IBM are great companies business- or product-wise, but they should both be applauded for funding truly innovative research -- be it for philanthropic reasons or for some future profit. Fact is, as you say, no other company is doing this. Not Google; not Apple; and, sadly, not Oracle.

> it doesn't matter how cool the invention is if you have to eat the rest of their shit with it.

But it does matter, because even if MS doesn't pick it up -- or implement it well -- someone else might.

⬐ dlitz

> even if MS doesn't pick it up -- or implement it well -- someone else might.

Unless there are potential patent problems.

⬐ johnbellone

I first saw a Microsoft Surface (table) presentation at their research facility in Boston. The next time that I went up there they were piloting the table at the Hilton as well. I feel like that they were definitely operating without the intent of monetizing it, but damn, I would love to see those tables at restaurants, etc.

⬐ swalsh

I played with the surface for a bit at the NERD in Cambridge too. I found it slow, and unresponsive. It was, and still is a great proof of concept but i'm not sure the tech is ready to be a product yet.

⬐ ronaldj

I remember testing one and it couldn't detect more than two fingers. There was some piano app and you couldn't play a chord with three notes.

⬐ NathanKP

That could easily have been a software limitation in that program rather than hardware limitation.

⬐ joshAg

I played a few words of scrabble on some version of the surface a few years ago (i think spring 2011), and it could handle 4 people using all ten fingers at once. when did you use the surface?

⬐ johnbellone

The first time was a couple of years ago and it was a demonstration with a Windows Mobile phone fanning out with contacts. This was given by a marketing type person, and could have been completely a sham.

The second time was about three years ago during St. Patrick's day at the Hilton. I was able to use most of the applications described above.

⬐ kevin_morrill

Yes, but keep in mind Microsoft Research is only the R in R&D, making up a small minority of the $9.6 Billion. Most of that money is counting the engineering resources in the product groups, such as Windows and Office.

⬐ dude_abides

You are right about Microsoft Research (MSR) but not about IBM Research. In fact, MSR is the only true academic-style research lab left in the world; all others either disbanded or became more product-focused. It will be interesting to see how long the MSR model survives. Will be great to hear the views of an MSRian on this.

⬐ jjcm

I'm not on MSR directly, but I am part of a future research team at Microsoft. Internally things are interesting - you have the freedom to do pretty much whatever you want, but you have to justify it's usefulness one way or another. Microsoft is made up of thousands of tiny little teams that are mostly autonomous - each team has to prove that there's a reason for it to exist though. With research, especially things that will only come to fruition ten or twenty years out, it's very hard to directly measure it's impact. One of the things we end up doing is alternating between future and near reaching projects so that we can justify our existence with projects that are tangible in the present, but also contribute to future goals as well.

In a sense we are product focused as well, except our target market isn't consumers, but rather people up on high within microsoft. We have to sell our research to them one way or another, and it's often the research teams that have the best advertising sense about them that end up doing the best.

Apple DID NOT invent gui. When Jobs visited PARC he saw three revolutionary ideas:

GUI Networked personal computers Object Oriented Programming

Source: http://www.amazon.com/Fumbling-Future-Invented-Personal-Comp...

Seriously, that book is a must read for any person that reads this site. 3 dollars for a used copy. And Apple did not license anything GUI related from Xerox - there was a lawsuit involving the lack of licensing the technology.

You know what rubs me the wrong way? I am a geek - I love it when the geeks get the credit for making things work and the marketing people just get the credit for the shiny veneer. Woz is the geek here and I feel like he doesnt get the credit he deserves. Anybody know where Woz worked before Apple? HP - he took the risk of leaving a well established company and joined forces with Steve Jobs. I am not saying it didn't work out well for him but I think too many people forget about him and focus on the other Steve. Oh well. Oh yeah, I wrote this on my iPad and it took forever to compose. FWIW.

It's worth pointing out that the most fundamental stuff came from Douglas Engelbart's SRI group, e.g. the mouse and windows: http://en.wikipedia.org/wiki/NLS_%28computer_system%29

Plus Xerox did sue Apple on the basis of copyright but the case was dismissed since the statute of limitations had expired.

What Xerox did and didn't do when it mattered (before this) is well described by the title of a book and the book itself: Fumbling the Future: How Xerox Invented, then Ignored, the First Personal Computer (http://www.amazon.com/Fumbling-Future-Invented-Personal-Comp...)

It was more or less invented by Xerox, but they never brought it to market. Why not? Xerox was a multi-billion-dollar company and didn't want to "waste time" on a product that at the time had a very small potential market.

That's how Alan Kay sums up the history, anyways. There's a much more complete account in Fumbling the Future: How Xerox Invented, then Ignored, the First Personal Computer: http://www.amazon.com/Fumbling-Future-Invented-Personal-Comp...