I don't understand why an established company failing to create new product categories by some arbitrary deadline ("they better have something completely new by the end of the year!") is seen as a sign of failure. If a company is hanging onto old businesses that are withering away while failing to rejuvenate those businesses or create new ones, that's failure, or the road to failure at least (Blackberry being one example). But that's not what's happening here.

For that matter, I don't see failure to maintain explosive growth as a failure of any company. It might be a failure as far as the stock market is concerned, but it's deeply screwed up that this is the dynamic driving the stock market.

The stock market for much of the tech industry is completely driven by growth (or the promise of future growth). This is bad, this does not lead to a better tech industry, and this is not healthy for any of the companies involved. It's only healthy for short term investors, who unfortunately seem to be way overrepresented in the tech industry.

The Greater Fool Theory (http://en.wikipedia.org/wiki/Greater_fool_theory) drives stock prices far more than the fundamental health or outlook for most tech companies.

Anyway, whenever I hear a complaint about company X because they haven't created some completely new product category in the past 12 months, I don't hear a complaint about the company. I hear a complaint about the stock price, which is driven by continuous (and possibly unhealthy for the company) growth, which drives the stock price due to the Greater Fool Theory as much anything else.

Such an opinion isn't even a commentary on the company- it's a commentary on a number (the stock price) that is most likely to go up when companies do risky and dangerous things (blow a ton of money trying to enter new markets or create new markets), and is completely disconnected from the fundamentals of the company, its profits, projections of its future profits, customer happiness and loyalty, and any number of other things that really ought to come in front of "short term explosive growth potential" when attempting to answer questions like, "is company X performing well?" or "is the CEO of company X doing a good job?".

What's worse is that when that number (again, the stock price) goes down due to a lack of growth in new product categories (Microsoft being the prime example here), it can force such a company to do things that are actively bad for it, because it is compelled to expend tons of resources floundering around trying to reinvent itself when no such complete reinvention is really necessary.

Just look at two companies that the stock market has been very kind to over the last 10 years: Amazon and Apple. Did Apple's stock go up because of its profit margins? Maybe somewhat, but I'm guessing that the market was really just responding to growth. Obviously Amazon's stock hasn't benefited from fat margins; growth is the only thing it has going for it, and it's done quite well.

In the Amazon case, I don't think there's even any concept anymore that someday it will slow down the growth and start fattening its margins. People used to say this like 10 years ago to explain the disconnect between Amazon's stock price and their margins, but I think at this point no one's even making vague allusions to that theory anymore. People buy Amazon stock because they think other people will buy Amazon stock based solely on growth. Someone might buy Amazon stock thinking that the whole growth thing is a scam, but they don't care because the stock price isn't based on Amazon's performance- it's based on how the buyer thinks other people will perceive Amazon's performance, scam or no. This is the Greater Fool Theory in a nutshell.