Slashdot Mirror
What Fruits Will Reduced R&D Bear For The U.S.?
lucabrasi999 writes "Here's an interesting
commentary from Mike Tarsala at CBS.Marketwatch.com regarding R&D spending by U.S. companies as it compares to overseas firms. It compares today's US tech firms to the Big Three Automakers of the 70's, while saying the overseas tech firms are similar to the Toyotas and Hondas of the 70's. In other words, US Tech firms are about to be taught a lesson in global capitalism. I think Mike is 100% correct. What do you think?"
Stem cell research.
Our puritanical (read: Conservative) stance not shared by other countries like India and the UK will definitely put us behind in this area.
No, you are right. If the economy was up R & D spending would also be up. R&D expenditures are in investment in the FUTURE whereas holding onto the cash and investing it in areas that give an immediate return help bolster the bottom line NOW. With the economy in the shitter companies I believe are holding back on unnnecessary R&D because if they spend the money they might not be able to meet or beat analysts expectations. With so many executive's compensation tied directly to company/stock performance if I were in this situation I would only spend money on R&D that I could afford to lose because R&D is a gamble not a gaurantee. Right now companies cannot afford to throw money away.
Patent litigation. Developing patents then sueing people for using them is going to be the next real business. Forget innovating, we can sue people and get quicker rests at much higher profit margins!
Someone will then patent a "patent trial" and then put an end to it all. (And not a good thing either - it'll be the end of innovation in America)
Slashdot's rate-of-post filter: Preventing you from posting too many great ideas at once.
With that as an example, I think that it's a little shortsighted to look at dollars to dollars and say that the US is coming up short. Maybe it is, but the article doesn't provide the evidence. A better measure of the balance of R&D budgeting is more qualitative than quantitative. What is coming out of R&D? Are we developing products and ideas that have any kind of a chance at hitting the market and actually making a profit? Don't jeer at the search for profitability...where do you think the R&D bucks come from?
I can only speak from my experience at the high tech company where I work, but R&D expenditures are a significant amount of total revenues. Perhaps other companies have different views, but for us, even in a tough time, R&D is the lifeblood of what we do. It's just that when money is as tight as it is now, the spending becomes much more focused.
Using Huawei Technologies as an example of the threat to American tech dominance is certainly a red herring. If Tarsala counts blatent copying of product and documentation as a positive result of R&D spending, then his perception of R&D is simply wrong. Honda didn't copy the CVCC from Ford or General Motors...they created it on their own.
-h-
If Honda can do for computers what it did for automobiles, in 10 years my PC will use .01 watts, be completely wireless, measure 4 cubic centimeters, have a holographic display and track my eye movement to move the cursor. (provided I have an X Sesion going. :)
There are 01 kinds of cars in the world. The General Lee, and everything else.
Research has been getting the axe for the last thirty years anyway. Look at Lucent, the sad remnant of Ma Bell's labs. They have some 3,000 employees who must strugle to support 250,000 pensioned retirees. Tell me what kind of "research" the local Bells have to take it's place, please. IBM? Shuting down, at least in the US. It's pathetic. It's like these companies think they can just fund a few graduate level slaves or wait for hobbiests to come up with ideas to steal.
DMCA, Hollings, Palladium. What might have sounded like paranoia is now common sense.
Look at TV. The NTSC standard: invented in USA. Perfected in Europe as the PAL standard. PAL gives a better quality picture, and has much better error-handling (in the analog sense): a small signal error on NTSC gives chrominance errors (read: green looks red, etc.) while on PAL, I'm not exactly sure, but apparently it only gives luminance errors (meaning, it's a little too dark or light) - somebody with more knowledge could probably clear that up.
The cell phone. Analog cell phones first took off in USA, today USA is struggling to implement 3G while its relatively common in Europe / Asia (this also has somewhat to do with geography and population density, yes...)
Does this mean that the same thing is going to happen with the PC? The PC was basically invented in USA (or at least popularized here) - and what's expected to come next... that's right, Unification. I think the biggest thing to come out of the East or Europe is going to be unified devices. It's already started - Sony equipment all 'talks' to each other through their 'S-link' implementation of IEEE 1394 (aka Firewire). Even though LG (an American company, I believe) is pushing their Internet-aware devices, they're not selling well. I have a feeling that companies not in USA with less likelyhood of sticking to the legacy standards are going to come out with a unified home control system that will knock our socks off. Remember: you heard it here first :D .
Karma: pi (Mostly due to circular reasoning in posts).
A number of years ago I when I was in college Lee Iaccoca (CEO of Chrysler at the time) gave a speech. He was asked why Chrysler does their engineering oversees. In a very obtuse way he basically answered "because they are better".
That, of course, really pissed me off. Not because he was wrong - he certainly wasn't. But the reason foriegn automotive engineers were better was his fault! For 20 years US auto makers did very little to push the envelope of auto engineering. They may not of needed to because of the market, but the real damage was that they lost a culture of skilled engineers.
Skilled engineering is not something you can just create on the turn of the dime. Experience means a lot in engineering. (And I don't simply mean the experience of individual people. I mean the experience of a group where there's always some continuity). If the US auto makers kept trying to innovate in the 60's and 70's, they would of had plenty of skilled engineers who would know how to make better cars, (even if the innovations weren't marketable). Instead, they had no engineers available and had to turn to foriegn companies for help.
Whether the same could happen in the IT industry, I don't know. At the moment the industry is still very competitive innovation-wise. So, it's not a matter of US industries sitting on their asses, like they did with cars. It's more a matter of them farming out to the lowest foriegn bidder. The net result could be same, though.
A 6.8% decline != sky falling. In fact, given the maturity of the innovation curve surrounding IP based technologies and given barriers to entry for silicon / software technologies, it may not be enough of a decline.
If you're in IT, think about it. What new technologies are going to be "really hot" over the next 24-48 months? Wireless? Databases? Operating Systems? Other than Security and maybe P2P, I can't think of any. And while Microsoft has sucked with their security offerings, I'd bet that the moment Groove or Ikimbo or whomever picks up steam there'll be a competing (albeit sucky) technology built into Windows.
None of the top index tech companies are going to be threatened by small or large overseas companies any time soon. I think it was Gerstner who said that "If someone else (like Microsoft) appears in the marketplace and threatens us, we'll simply buy them."
To that extent his automaker analogy is self-defeating
1.) Honda, Toyota, et. al, were all rumored to be on the ropes and acquisition targets by US automakers before the recent slump. While that's not likely to happen in the current economy, those Japanese companies aren't exactly shining examples of market longevity.
2.) US automakers bought a startling number of European companies when privatized. To compete in market spaces where they had poor market penetration, Jaguar, Volvo, Saab, Rover, and Lamborghini (I'm sure I'm missing someone) are for the most part more competitive than they were, and in many cases, helping their parent companies better compete in the luxury space.
To me, this just smacks of silly alarmist thinking - like someone needed a topic for the day.
"oohhh... I didn't know Schopenhauer was a philosopher!"
Seem plausible, but what's to say that it's not the other way around? (Anybody that's studied correlations can tell you that correlations say nothing of causality...)
What if the economy is in the crapper because US corporations are more enthused about keeping the status quo than of pushing new and innovative technologies. Even bloody Intel is saying "bah... 64 bit processing is too much trouble than it's worth to really push the technology"
The RIAA is going crazy over MP3 sharers instead of understanding that digital encoding and mp3s are the wave of the future, not to mention the internet is a highly more effective distribution center than anything else out there.
Microsoft still refuses to believe in any uses towards Open-source programming, when what you're doing is combining the needs of regular every day power-users... even now Linux amongst other projects is looking towards the desktop and slowly rendering Microsoft a $150 waste of time.
Even our good friend Dubya would rather spend a crapload of money on fighting in the Middle East over oil than push technologies that would render necessity for Middle-Eastern Oil completely useless.
There's a lot of evidence to suggest that lack of Technological push is what's going to bring down the American Economy... so a correlation doesn't necessarily imply that America's low technological push is simply a state of the environment.
Karma: Non-Heinous
I'm not so sure that increased R&D spending due to economic is necessarily a Good Thing (tm). I've been in R&D for years and before the Dot.Bomb money infiltrated our devision our department was small, we worked hard for the progress we made and basically it was fun. When all the money started floating about upper level management started having delusions of grandeur, we got into technologies that were not our core compentices, we made dubious business deals to make devices that didn't really make sense in the market. We hired many programmers and consultants that our existing managers had no idea how to motivate. Suddenly the lab began to resemble the world according to Scot Adams. Now that the bubble burst, our original technology has been sold twice (in three years) and several of the projects I've worked on have been canceled. Most of the dead wood has been pruned away and what reamins are a couple of small groups that will wind up having to move to continue research. Hindsight being 20-20 I don't think we should let ourselves become distracted and concentrated on continuing real development in the areas we were working on to begin with. Bottom line: increased spending is not automaticaly a Good Thing, increased productivity is...
Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.
At the company that I work, we've been constantly telling our R&D departments that they shouldn't worry about the down-turn because we are here for the long-run, and we aren't going to rob profits tomorrow to make analysts happy today. That is until we had 8 straight losing quarters (about to be 9, with rumors of $7-900 million lost this last quarter running around the plant), dropping from $3 billion in cash to borrowing $500 mil. And cutting 10% of the workforce via layoffs. At this point we simply can't *afford* to think soley long-term, we need to be thinking in terms of "what will keep the lights on for the next year?". It sucks, but sometimes that's the way it has to be.
You may already have stood in such a line without knowing it. Many medical texts still use illustrations and diagrams from Pernkopf's Atlas (Atlas of Topographical and Applied Human Anatomy) to this day.
The Atlas is based on things learned during the commission of atrocities. Its author was a supporter of the regime responsible for those atrocities.
And yet, its contents have been used to save lives for 60 years, perhaps even including yours.
> For me the question is not *what* but who we're doing research on, and in the case of stem cell research, we've stepped over the line.
Do we throw out anatomy because it has benefited from what virtually the entire population of the planet agrees were war crimes performed on adult sentient beings?
If not, why should we throw out a technology that could lead to cure for Parkinson's, as well as the growth of replacement organs (possibly without an attached host body!) on the objections of a few religious fundamentalists ("life begins at conception / glob of undifferentiated cell has a soul" stage) or somewhat less-fundamental fundamentalists ("life begins when it looks cute / fetus" stage)?
It's not as easy a call as you might think, is it? :)
For the record (no point in bitching about bioethics unless you have the balls to make a stand - and while I disagree with your stand, I congratulate you on having one) I believe what Pernkopf did was grossly unethical, but I have no reservation and feel no guilt about being treated by doctors who learned from his work. I have no reservations about stem cell or fetal research. I see no contradiction between these two positions.
50 years from now, today's bioengineers may be looked upon as ignorant barbarians committing mass murder, or as the saviors of the human race. My position on bioengineering is the result of a moral choice, and I'm willing to accept any guilt on my conscience should I facts cause me to revisit it in the intervening half-century.
As market dynamics force a greater focus on shareholder value over solid profit models, and on the short term over the long term, industry is pushed more and more towards a strategy that focuses on the short term bottom line.
This is very true, but there is a trend, starting among academic economists but moving into the mainstream, away from this kind of short-term thinking. 80 years ago it was well understood that the value of a stock was precisely the value of its assets plus the net present value of its future dividend stream, and that way of looking at market valuations gives investors a reason to value companies that make good strategic choices, even if it's at the expense of short-term profits. Over the last 40 years or so, the idea of "growth" stocks became widespread -- the idea that the value of a company is determined not by anything so mundane as its future earnings, but, essentially, by what investors think other investors will be willing to pay for it. This approach is epitomized by Microsoft, a company that never intended to pay any dividends (yes, I know they're paying a dividend now).
The result is investors that jump in and out of positions, which in turn forces companies to focus on short-term goals in order to keep their stock price up -- particularly since the wealth of most executives is tied directly to their employer's stock price.
However, not only is the "growth" stock theory proving to create a market that is volatile and irrational, but the fundamental assumption underlying the idea has taken a real pounding of late. The assumption is: "Executives are better at managing investors' money than the investors themselves are."
If the company takes its profits and pays out dividends, investors are then free to reinvest those dividends however they see fit. On the other hand, if investors allow a company to retain profits, they're betting that the company's executives can do a better job of managing the investors' money than the investors can. In a nutshell: investors are trusting the executives with all of their money, without any real way of evaluating the results.
The recent spate of scandals has really rocked the "trustworthy executives" theorists on their heels. As investors realize that no amount of board oversight can really keep the executives honest, they'll come to the conclusion that the best thing to do is to take the profits out of the companies and force the executives to run a tight ship and to publicly raise money when they need it.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
What happens when most of the R&D in tech is taking place overseas (and it might be argued that most of the R&D going on right now is taking place outside of the USA) and they have these very strict IP laws in place? The IP laws were put in place to protect American interests (presumably) but what happens when they become a serious stumbling block to the US economy (well, in a more obvious way than it already is). Imagine if BT had been able to enforce their hyperlinking patent and had begun demanding licensing fees of every company in the US?
I think this is an ideal situation to slap congress around to the fact that IP laws need to be changed to a more reasonable framework. Reward the inventor, yes, but granting monopolies isn't going to help society or the economy in the long run.
Not just answers, the correct questions.
I'm a medical device consultant. My American clients want me to help them commercialize technology they have licensed. Most of it is from Europe and Australia.
My clients in China and India want to beat the EU and USA companies with better tech done cheaper. And they aren't counting on labor costs to get the cost reduction, they are counting on superior smarts.
And now I've got a company based in South Africa that wants to take a technology from Egypt and one from Cuba and develop a new surgical treatment that combines the two. Manufacturing will be in Vietnam. And I'm the only American on the team.
You don't need to read theoretical articles. Next time you download a printer driver, check out where the programming was done. American domination of the globe is a temporary abberation, soon to be remedied in the traditional manner.
"Don't expel your beverage through your nostrils when the really rich demand the impossible. There's a fortune there for