For more than two decades, Microsoft operated a research arm that developed groundbreaking technology, but all too often failed to pay dividends for the company's bottom line.

Today, however, Bloomberg reports that the tech giant is in the process of overhauling Microsoft Research in an effort to compete with its Silicon Valley rivals.

Microsoft co-founder Bill Gates and then-CTO Nathan Myhrvold hired Carnegie Mellon University's Rick Rashid to create a research lab in 1991, but the lab's scientists were generally isolated from the rest of the company.

Although the model allowed researchers to follow long-term projects without worrying about their impact on profits, it also resulted in what University of Washington computer scientist and Microsoft Research advisor Ed Lazowska called "an internal technology transfer problem."

Digital mapping technology developed by Microsoft in the 1990s, for example, was kept on the back burner until Google Maps debuted in 2005.

Google and Facebook, meanwhile, took the opposite approach in recent years by teaming researchers with managers and capitalizing on promising ideas, particularly in the area of artificial intelligence.

Microsoft, however, is adjusting its research strategy under CEO Satya Nadella.

Shortly after taking over in early 2014, Nadella fast-tracked the technology that would become Skype Translator.

Later that year, about half of the 1,000-employee Microsoft Research staff was assigned to MSR NExT, which focuses on research that can impact the company.

The transition is far from complete, but the changes is already paying dividends for the company.

Microsoft rolled out new Bing servers, Office cloud tools, the augmented-reality HoloLens headset and, starting next week, new email scanning capabilities for its Cortana digital assistant.

"We have enjoyed a stellar reputation in academia because of our scientific impact," Microsoft Research vice president Jeannette Wing told Bloomberg. "Now there's an emphasis to have as much company impact as we've had scientific impact."

By: DocMemory
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