Technology Futures

Commentaries on Directions That Will Impact the Future of Technology

Industrial Research, Alive but not Well in the Tech Sector

This is about electronics-based industry, not biotech or pharmaceuticals.

Fifty years ago, the leading US tech companies had the finest pure research laboratories in the world.  Since they paid their employees more than most universities, they tended to get the best and the brightest, who were often given blank checks to follow their interests without interference from a bureaucracy.  This resulted in the development of such things as UNIX (Bell Labs), nanotechnology (IBM) and the iconic GUI (Xerox developed it, Apple stole it).

The granddaddy of them all was Bell Labs, followed by IBM, Xerox, HP, and a few others.  Then an a–h–le named Judge Greene decided that AT&T, which created the greatest telecommunications infrastructure in the world, was a no-goodnik and busted up the company, which, besides dropping the US telecommunications industry about 20 years behind Europe, Japan and Korea, effectively gutted Bell Labs.  Bell Labs, you may remember, developed the laser, the transistor, cellular networks, and solar cells among thousands of lesser known inventions that have significantly impacted  the lives of 90% of the world’s population.

In the 1970s, wall street exerted tremendous pressure on companies to improve short-term profits.  As a result, pure research activities were severely curtailed at most American companies.  Research projects that held no promise for short-term financial returns were dropped, and thousands of top-notch scientists and engineers went looking for jobs.  Pure research funding came mostly from the government and most of that money went to universities.  To make matters worse, most government-funded projects have government strings attached.  Now I am not knocking university research, but the diminishing of our industrial research complex has cost the US big time, and has a lot to do with the fact that the US’ once unquestioned technology leadership is being challenged throughout the world.

Unfortunately, the people who follow this subject talk  about R&D, not R.  Thus, if you look a tables of R&D expenditures published by various consulting firms and universities, you will find that most of the leaders are car and oil companies.  These companies are spending a lot on D and very little on R.  I dismiss them as irrelevant to this discussion.

In the electronics/computing/telecom sector, the three leaders in annual R&D expenditures are Microsoft ($9.2B), Intel ($7.7B) and IBM ($6.3B).  Although none of these companies publicly break out R from D, these industry leaders are indeed spending a lot on basic research.  Thank goodness.

While our government leaders give a lot of speeches about restoring and/or increasing America’s leadership in technology, I don’t hear a lot of talk about how government can incentivize our industry to get back into the basic research business.  If we don’t do that, the technologically emerging countries are going to run right by us.


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