The new face of R&D: What's cooking at IBM, HP and Microsoft

Is R&D in the US losing focus, or just shifting focus?

Pundits in recent years have taken to bemoaning a retreat by US industry from basic research in science and technology. And indeed, it's easy to cite research labs whose glory days have come and gone -- Bell Laboratories comes to mind. But consider this: IBM, Microsoft and Hewlett-Packard together spend US$17 billion annually on research and development.

That's right, $17 billion.

While many of those dollars are directed at product development, hundreds of millions are flowing into areas like computational biology, nanotechnology and advanced mathematics that may take years to bear fruit, if ever.

It's significant that each of these companies has undergone substantial changes in its research labs recently:

• In July 2007, IBM named a new research director and announced plans to invest more than US$100 million in each of four long-term exploratory research projects.
• A month later, HP also brought in a new research director and shortly after that launched a new strategy based on five mega-areas of IT research.
• Then, earlier this year, Microsoft China said that it would build a new R&D center in Beijing, and Microsoft Research announced that it would open a new lab in Cambridge, Massachusetts.

While the three companies have strikingly different research agendas, they have one important thing in common. All three are increasingly reaching outside of lab walls to collaborate in research with other companies, universities and customers. With that outreach comes a new openness that can speed the flow of ideas into the marketplace, according to Henry Chesbrough, executive director of the Center for Open Innovation at the University of California, Berkeley.

A short history of R&D

"R&D is basically seeking out new knowledge, and the question is, where are the good ideas?" Chesbrough says. "After World War II, the good ideas were loaded up in a small number of large companies -- Bell Labs, IBM, Xerox PARC, GE and so on. These were islands of towering knowledge in a relative desert."

At the time, he says, universities generally disdained working with companies and instead relied on a US federal government that was eager to fund research that might help win the Cold War.

Then the Berlin Wall fell, and much of the federal largess dried up, Chesbrough continues. With its antitrust actions, the government turned its attention to reining in technology giants like AT&T and IBM. Meanwhile, Silicon Valley was born, and so was the Internet.

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