Internecine competition: good or bad for innovation?

Ex-Microsoft-VP Dick Brass takes to the op-ed page of the New York Times today to chide his old firm for becoming “a clumsy, uncompetitive innovator” whose “huge profits…come almost entirely from Windows and Office programs first developed decades ago.” He adds, “Like GM with its trucks and SUVs, Microsoft can’t count on these venerable products to sustain it forever.”Microsoft, Brass writes, “never developed a true system for innovation,” and he attributes problems to interdepartmental skirmishes and to poor timing: “too soon on Web TV, too late on iPods.” As for interdepartmental conflict, he writes that internal competition can be good but must not be allowed to become uncontrolled, with “big established groups…allowed to prey upon emerging teams.”

As for Microsoft’s efforts to be profitable in areas outside Windows and Office, the firm expects to be on the road to profitability with its search engine Bing after completing a search advertising partnership with Yahoo. Yusuf Mehdi, senior VP of Microsoft’s online audience business, told Reuters on Tuesday, “As soon as we close and implement the Yahoo deal, we have achieved a milestone: for advertisers, we are a credible No. 2.There’s no question we intend to make a profit. Clearly there’s a huge return in the search marketplace that can more than make up the investments we’ve put in to this point.” (H/T Rick Pennington.)