The reason Robbie Bach was fired

Vague justifications about under-performance of Windows Mobile or cancelled Courier miss the whole point.  The chronic problems with Microsoft’s consumer businesses cited as causes for dismissal have roots in core processes and priorities which management changes will not address.  The failure of Zune was evident long ago. Windows Mobile has not been competitive with RIM for years, and failed to take significant share from Symbian, never mind iPhone. Tablets were the responsibility of the Windows team.  Kin is a rogue project based on a bone-headed acquisition. From a P/L point of view, Entertainment was mostly Xbox, which although deep in the hole over its lifetime, was starting to break even.

No, the reason I believe Bach lost his head is that HP bought Palm.

Bach lost a key account; in fact, he could be responsible for having lost the biggest account that Microsoft ever had.  Ballmer is a sales guy and he knows the importance of these relationships.  A customer like HP must be managed carefully and their strategy must be steered to fit with yours.  If HP felt they needed to go somewhere else for their mobile OS, it’s a slap in the face, but if they buy the asset and IP and internalize a competing platform, then that is a dagger to the heart for Ballmer.

Consider Google’s seduction of Dell. Microsoft can tolerate Dell’s affairs (Dell even fooled around with Linux back in the day.) But in contrast, HP is effectively filing for divorce.

The blow could not have been more obvious and more cruel.

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Apple’s R&D Efficiency

In fact it’s rumored that Apple brought the iPhone to market for a mere $150 million, doing so organically without acquisition outside of a touch gesture recognition company named FingerWorks.

This begs the question: how in the world did Apple grow the iPhone platform organically from zero into the most profitable cell phone business in the world with so little investment?

via Apple’s Incredible Efficient Growth.

Apple has always spent below the industry average for R&D.

Here are Apple’s trailing 9 quarters R&D as percent of sales:

3.42% 3.86% 2.59% 2.65% 3.51% 3.50% 2.93% 2.54% 3.16%

Nokia spends at least 10% of sales on R&D and Microsoft at least that much.

But these numbers are not as spectacular as the comment above that iPhone development cost was $150 million.  To date, the product has generated $31.4B in sales.

As the article points out, Apple spent $4.6B on R&D over the past four years and Microsoft spent 7x that or $31 billion. Cisco and Intel spent 4x.