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?"

Comments

Yep

[Em Emalb]

And it's because the economy is in the crapper, not in spite of it.

If the economy was similar to what it was a few years ago, then sure, R&D dollars would be up a lot.

Am I the only one that sees this correlation?

Re:Yep

[Teancom]

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.

Re:We'll probably definitely suffer in areas of...

[westcourt_monk]

What blows my mind is that what will happen when stem cell research pays off with cures and treatments that vastly improve the quality of life of people? Will those who voted against the legislation benefit from it?

Of course they will..

Standard US pattern

[sien]

Of course. In the US research is done for the DoD.

Private companies then exploit this and make money.

Also, due to the efficiency of the US capital market and the enormous US home market new technology is rapidly developed in the US but perfected elsewhere. But the same speed to start things also drives an outlook that is only quarterly at most US firms which kills quality after a while.

The perfect example is the car industry. The US just got big and for a long time the only US car innovations are the cupholder and the SUV. ABS, fuel injection, constant 4WD multiple valves and other improvements do not come from Detroit. Another is large jets.

Why should computing be any different ?

Re:Standard US pattern

[Anonymous Coward]

For the last time, SUVs are not cars. They were started as cost cutting measures to sell trucks to morons, while avoiding passenger vehicle safety requirements. We, the United Dolts of America, fell for it.

So in closing, the cupholder is the ONLY domestic auto innovation (and even that is questionable).

Hmmm......

[jmacleod9975]

He draws some interesting parallels, but it would be nice to have some numbers to back up his statements. It is easy to talk doom and gloom, and everyone is quick to jump on that bandwagon, but lets see some hard data.

He may be right though, but would that be so bad? I am an American, and I love America, but I would like to see a world where there there is a little more balance of economic power. Would that be so bad for the average American?

Bound to happen...

[Lysol]

I have a friend who is my economic guru and we talk about this quite a bit. Yes, because there is an administration that is not focused on the economy, everyone is holding on to their money. Thusly, no R&D. We've actually made the car comparison a quite a few times.

Another thing we talk about though, is the fact that as other countries 'catch up' technologically to us, there will be less and less reason for companies not to outsource all their tech needs. This already happens to a great extent in the manfacturing industry and China. For tech, we see a lot of farming out to India, especially since they're are lot of competent English speakers there.

How can U.S. firms compete with this? I don't think they can and ultimately, another industry will move more and more off shore. This doesn't mean, however, that the U.S. will not find other markets.

I think that if there are more and more highly skilled people in other countries around the world that can do the same tech work our skilled workers do here, then the next place is space. Unfortunately, we're not jumping on that and now we have a European agency headed to the moon and China talking about mining it. Welcome to the future of the transnats. Like hi-tech, the U.S. has the opportunity to drive this one for a while. The question is will they?

The fruits are simple...

[scorp1us]

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)

The man makes some good points

[InternalWave]

This same line of discussion has come up here many times before. One comment I have seen frequently runs along the lines of: "Well, buddy, don't be a pussy. It's all competition, and if you're good enough you'll still have a job".

Well, guess what, guys? Unless you're a genius - and I suspect most of us aren't (in fact, I'd suspect most of us are slightly above average to being very good at what we do, but we're not mostly very good) - we're going to lose our jobs. Because a decent Indian programmer making $5K a year looks a hell of a lot better than a great American programmer making $50K a year.

We have a window of less than ten years, I think, in which to react to the possible destruction of American IT. Because humans elsewhere are just as smart. Only thing is, they get paid like shit.

You think you can compete because you're better? Dream away, my son.

What Fruits Will Reduced R&D Bear For The U.S.

[stratjakt]

Probably not enormous, mutant, cybernetically-enhanced mega-fruit that dominate the landscape and roam the earth as the megafauna of a new age.

Nope. Not without research dollars. Just plain old boring apples and oranges and crap.

Education Today

[rsatter]

I agree with him although I think R&D will be more affected by this country failed education system more than the lower funding. Last night, I spent time with my youngest son who is in 7th grade doing his homework. He has only just now gotten to porportions granted he is not in advanced math but still by the time I was in 7th grade we were doing pre-algebra and that was really review since I had learned a lot of in 5th grade along with others at my grade level (Special elementary school but still).

Even scarier, he is making a C in math and science and he is one of only 4 kids in those classes that is passing. Our education system is very broken in this country and will only get worse if Bush has his way. My son goes to Houston Independent School District home of the finest education system hence why we kicked Rod Paige up to Secretary of Education. After all HISD students pass the state test or conviently transfer to another school or not drop out code even if the principals have to lie.

The Big Picture

[nanojath]

This is just one element of a bigger picture of what's wrong with the way our economy is being run. 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 reactionary business policy is written all over the current recession: the dot-com collapse, the various business scandals (corporate leadership, consultant and auditor collusion to prop up share values rather than fix broken business models), growing issues of overcapacity (caused by investment in manufacturing capacity based on unrealistic consumer projections - themselves based on the idiotic notion that consumers could and would continue digging themselves into insurmountable credit holes forever). It may look good this quarter but eventually the account must be drawn down.

The return on investment for sound R&D has been well established. Of course, there is a world of interpretation in that little qualifier "sound" but the fact remains that R&D investment is critical to continued, sustainable growth - particularly in the tech world. Unfortunately, the narrow-minded focus on the quarters earnings doesn't permit this kind of rationality that could speed economic recovery. It makes about as much sense as refusing to change the oil in your car because you're short on cash, but hey, that's business.

Software patents will make this far worse

[Random BedHead Ed]

Software patents in the U.S. - and the haphazardly generous way in which they're given out - will make things much worse for the technology industry than cheaper, smaller cars ever made things for Detriot in the 70s. The U.S. industry could approach the point of stagnation if innovative development remains encumbered by these "intellectual property" laws.

Look at the rumors surrounding SCO and the BSD-derived code in Windows, Mac OS X and GNU/Linux that SCO thinks it "owns." A court ordered licensing fee would set back the free and open source software movements, even if replacement code is eventually written. Developing nations do not have these restrictions, and will benefit enormously. Without a change the U.S. will be come less relevant.

Re:$1.2 Billion to fuel cell research

[frank_adrian314159]

Bush said he wanted $1.2 Billion put towards developing fuel cell technologies. I know, I know, it isn't the same as the military budget,

Yo! Bright boy. It isn't even close to what he wants to pay to oust Sadam, let alone the military budget. Remember he wants Congress to allocate $68B for his little Iraqian adventure, and still needs $32B to bribe Turkey, after that. $1.2B may sound like a lot to you, but compared with most Federal expendatures, it's lost in the noise. So, trust me, Bush is (yet again) no hero in this area.