[via Knowledge@Wharton]

Some thoughts about some strategic moves by Microsoft.

Indeed, Microsoft is a company in transition, and investors, customers and the entire technology industry would be wise to pay attention. At issue is whether Microsoft has grown too big to be nimble enough to compete with its long list of rivals on many fronts: Google in Internet search and advertising, Sony in video games with the launch of its Playstation 3 on November 17, Linux inside the corporation, and Apple Computer in digital media, to name just a few. […]

Kaplan, however, argues that Microsoft should be experimenting with new markets and that even a failure isn’t a waste of money. “A big company like Microsoft should be running a lot of (potentially conflicting) experiments. Only some will work out. Creativity must almost by definition involve failed experiments. That’s why creative destruction is the essential dynamic of the marketplace.” […]

Microsoft is worth $236 billion as of May 12. If a startup becomes a company with $2 billion in annual revenue, it is considered a success. Microsoft would need more than 100 successful business launches just to keep its current market capitalization if the Windows and Office franchise were eroded. “There’s nothing you can do to be offensive when you are talking about hundreds of billions of dollars,” says Metrick. “All of these new ventures are small potatoes if you lose Windows and Office.” […]