Assessing the Impacts of Changes in the Information Technology R&D Ecosystem Retaining Leadership in an Increasingly Global Environment (2009) / Chapter Skim
Currently Skimming:
3 The Changing Landscape of the U.S. Information Technology R&D Ecosystem: 1995-2007
3 The Changing Landscape of the U.S. Information Technology R&D Ecosystem: 1995-2007
Pages 42-105
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 42... ...
IT R&D ecosystem in terms of the rise and aftermath of the speculative financial bubble. The second section discusses the emergence of new technology platforms, based on open-source software, collaborative community development, and Web-centric technologies, and the challenges that these present to traditional IT industrial organization.
|
From page 43... ...
According to data from the MoneyTree survey, the number of IT start-up companies receiving venture investments reached a peak of more For a broad study of the 1995 stock market boom in the context of others and with respect to structural factors contributing to speculative bubbles, see Robert Schiller, Irrational Exuberance, Princeton University Press, Princeton, N.J., 2000. The overall peak in terms of both the total number of venture deals and total amounts raised came in the first quarter of 2000: in that quarter there were 2,129 deals amounting to $28,414 million, according to PricewaterhouseCoopers/Thomson Financial/National Venture Capital Association MoneyTree Report historical data, available at https://www.
|
From page 44... ...
Data from PricewaterhouseCoopers/Thomson Financial/National Venture Capital Association MoneyTree Report, available at https://www.pwcmoneytree.com/MTPublic/ns/nav.
|
From page 45... ...
was established in 2002 to preserve business plans and other digital ephemera from the dot-com era technology companies. Using a sample of new technology ventures drawn from the funding solicitations re ceived by one venture capital fund, Goldfarb, Kirsch, and Pfarrer extrapolated estimates of venture creation during the 1996-2002 period that include transactions not published in the Thomson Financial data.
|
From page 46... ...
Global efforts to address the Y2K problem provided a major growth impetus for the Indian software industry. Few programmers in the United BrentD.
|
From page 47... ...
This happened at the same time that the software industry in India and Eastern Europe enjoyed high rates of growth, helping to accelerate the migration of projects to these regions. In 2007, the markets and the field continued their recovery. Venture capital investment was up, reaching the highest levels since 2001.
|
From page 48... ...
from the 113 graduate schools that enroll nearly half of all international graduate students in the United States. These data indicated an overall decline of 12The average salary offer for a college graduate with a computer science major was $53,051 in 2007, up 4.5 percent from the previous year.
|
From page 49... ...
Engineering students 16See Council of Graduate Schools, "Council of Graduate Schools Finds Widespread Declines in International Graduate Student Applications to U.S. Graduate Schools for Fall 2004" and "Council of Graduate Schools Finds Decline in New International Graduate Student Enrollment for the Third Consecutive Year," Washington, D.C., March 2, 2004, and November 4, 2004, respectively.
|
From page 50... ...
data on first-time, full-time graduate student enrollments in computer science showed a large drop in foreign student enrollments, from 6,500 students in 2001 to about 4,300 students in 2003. There was a small decline to about 4,000 students in 2004, then a small rise in 2005 to just over 4,500 students.
|
From page 51... ...
23, January 4, 2007, available at http://ssrn.com/abstract=990152; accessed December 26, 2007. 23The official name of the Sarbanes-Oxley Act of 2002 (Public Law 107-204, 116 Stat.
|
From page 52... ...
Other laws also provide tools to prevent money laundering. See Bank Secrecy Act/Anti-Money Laundering: Comptroller's Handbook, September 2000, available at http://www.occ.treas.gov/handbook/ bsa.pdf; accessed October 19, 2007.
|
From page 53... ...
They include consumers in addition to suppliers and enterprise customers.31 The importance of consumer markets has continued to grow, especially in new or growing segments such as multimedia, social networking, games, cell phones, personal computers, and even automobiles. Start-up investments by venture capitalists are equally diverse.
|
From page 54... ...
, and the combination of open-source software (Linux, the Apache Web server, MySQL, and PHP-Perl-Python) used to run dynamic Web sites and commonly known as LAMP, for the four software components that contribute to the platform.
|
From page 55... ...
This development was driven by the underlying network equipment as well as by new end-user functionality delivered to client-side Web browsers from server-side Web servers, using the protocol architecture of the World Wide Web. New services rapidly emerged for Web directories, Internet search, e-commerce, and auctions.
|
From page 56... ...
, the Mosaic Web browser, and the commercialized Internet. From this confluence flowed the first generation of Web applications.36 The so-called Web 1.0 consists of the WWW protocol stack for the exchange of Web pages between servers and browsers, and the first generation of Web sites.
|
From page 57... ...
(It ran the University of California, Berkeley, UNIX operating system, engineered by Berkeley computer science graduate student and Sun Microsystems cofounder Bill Joy under the supervision of Professors Domenico Ferrari and Bob Fabry, also supported by DARPA.) Page and Brin were introduced to Bechtolsheim by Stan ford computer science Professor David Cheriton, who had previously cofounded Granite Networks (high performance networks)
|
From page 58... ...
Starting with the same code base, a group independently developed the Apache Web server as open source in 1995.38 A widely used Web applications stack is based on the open-source operating system Linux, the Apache Web server, MySQL (open-source data management) , and PHPPerl-Python (a scripting language for program-driven dynamic Web page behavior)
|
From page 59... ...
The next wave of Web crawlers included AltaVista (from Digital Equipment Corporation [DEC]
|
From page 60... ...
Amazon.com Web Services is constructed from underlying services for scalable virtual servers, reliable network storage, message linking across processing and networks, comprehensive Web site traffic data, catalogs and electronic commerce, and historical pricing information. Evolution: From Web 1.0 to the Web 2.0 Platform This subsection reviews the rise of Web 2.0, a second generation of Web-based technology, services, and applications that began to emerge in the time frame of the early 2000s.
|
From page 61... ...
The Asynchronous Web browser/Web server protocol extensions enhance responsiveness through background communications that obviate the need to reload an entire Web page when a user action induces a change. Google, for example, provides an Ajax application programming interface (API)
|
From page 62... ...
As another example, mashups illustrate the power of composition within Web service architectures: a mashup is a kind of Web application that uses the existing Web services frameworks to compose a new Web site from existing sites that support the necessary access APIs. Case Study: Facebook as a Platform Facebook, a popular social networking Web site that traces its history to 2004, offers a case study of how modern Web applications exploit pervasive composition to create a new platform for application development that gives rise to a new ecosystem.
|
From page 63... ...
LAMP44 is an example of an application environment founded on open-source components. Implications for the Software Industry Some traditional software firms have responded to the rise of open source by embracing it.
|
From page 64... ...
This approach is viewed as a critical response to Microsoft's proprietary .NET Framework.45 Significant Trend: The Emergence of Mobile and Data-Center Platforms The major hardware trends of the 1995-2007 period are the following: on the Web access side, the rise of mobile devices; on the Web services side, the concentration of back-end processing into Internet data centers. This subsection reviews some of the dominant hardware trends in both.
|
From page 65... ...
Major Web properties and many large enterprises use Internet data centers in one form or another. The ancestor of the data center is the Web hosting facility that came into being in the late 1990s.
|
From page 66... ...
47For more information, see Wikipedia, "Enhanced Data Rates for GSM Evolution," avail able at http://en.wikipedia.org/wiki/Enhanced_Data_Rates_for_GSM_Evolution; accessed July 31, 2007. See also "GSM/3G Market/Technology Update: EDGE Evolution," Global Mobile Suppliers Association, December 2007, available at http://www.gsacom.com; accessed February 20, 2008.
|
From page 67... ...
org/wiki/HSDPA; accessed July 31, 2007. See also Global Mobile Suppliers Association survey of HSPDA and HSUPA deployments worldwide, available at www.gsacom.com; accessed February 20, 2007.
|
From page 68... ...
Evolution of the Semiconductor, Computer, and Software Subsectors Let us look first at the evolution of the industry from the perspective of its three essential subsectors: the semiconductor industry, the computer industry, and the software industry. The Semiconductor Industry The transistor was invented at Bell Laboratories in 1947.
|
From page 69... ...
By 1963 the military accounted for nearly half of device sales, financing around 25 percent of semiconductor R&D.54 Subsequent growth was driven by the computer industry, also based predominantly in the United States. The first challenge to the semiconductor industry in the United States came from Japan, where the initial inroads were made by firms that pioneered transistor radios and went on to transistorize televisions and other consumer electronics products.
|
From page 70... ...
Edward Steimueller, "The Evolution of Competitive Advantage in the Worldwide Semiconductor Industry," in Sources of Industrial Leadership, Richard R Nelson and David C
|
From page 71... ...
See http://www.sematech.org; accessed October 30, 2008. 64Jeffrey T
|
From page 72... ...
Bresnahan and Franco Malerba, "Industrial Dynamics and the Evolution of Firms' and Nations' Competitive Capabilities in the World Computer Industry," in Sources of Industrial Leadership, Richard R Nelson and David C
|
From page 73... ...
The employment of engineers is stable but not growing in the United States, whereas it is growing rapidly in Taiwan.72 The growth in PC demand in Asia and the faster adoption of broadband and mobile telephony in some countries outside the United States, particularly Asia, may further accelerate the development of the industry outside the United States. The Software Industry Software is provided both by vendors, in the form of products and services, and by users.
|
From page 74... ...
:947-966, 1996. 75Ashish Arora, Alfonso Gambardella, and Steven Klepper, "Organizational Capabilities and the Rise of the Software Industry in the Emerging Economies: Lessons from the His
|
From page 75... ...
Industries," in From Underdogs to Tigers: The Rise and Growth of the Software Industry in Brazil, China, India, Ireland, and Israel, Ashish Arora and Alfonso Gambardella, eds., Oxford University Press, USA, New York, N.Y., 2005, pp.
|
From page 76... ...
Complementarities also develop. In the United States, for example, Silicon Valley has not only leading semiconductor firms, but also some of the largest equipment manufacturers and design software firms.
|
From page 77... ...
" January 1, 2000, available at http://repositories.cdlib.org/brie/BRIEWP138/; accessed July 3, 2007. 82A key book on the early development of Silicon Valley is Christophe Lecuyer's Making Silicon Valley: Innovation and the Growth of High Tech, 1930-1970, MIT Press, Cambridge, Mass., 2006.
|
From page 78... ...
firms set up facilities in Bangalore where Indian engineers and programmers 84Association for Computing Machinery Job Migration Task Force, Globalization and Offshoring of Software: A Report of the ACM Job Migration Task Force, W Aspray, F
|
From page 79... ...
See A Sands, "The Indian Software Industry," in A
|
From page 80... ...
87Ruth David, "Vodafone Wins Stake in India Cell Phone Market," Forbes, February 2007, available at http://www.forbes.com/business/2007/02/12/essar-hutch-vodafone-cx_rd_ 0212bid-update2.html; accessed June 20, 2007. 88Leonard Lynn and Harold Salzman, "The ‘New' Globalization of Engineering: How the Offshoring of Advanced Engineering Affects Competitiveness and Development," paper presented at the Sloan Industry Studies Annual Meeting, Boston, Mass., 2007.
|
From page 81... ...
design engineers was 11,300 in 200594 and was projected to grow to 33,135 by 2010. For the year 2005, revenues were estimated to be $583 million; they are expected to reach $2 billion by 2010.95 The leading semiconductor design software firms are also increasing their presence in India, both to service the local market and to support the global market.
|
From page 82... ...
98Ravi Sharma, "Huawei Keeping Fingers Crossed on Simpler Work Visa Norms for Chinese Personnel," The Hindu, December 17, 2006, available at http://www.hindu.com/ 2006/12/17/stories/2006121701920400.htm; accessed June 20, 2007. 99Rafiq Dossani and Martin Kenney, "The Evolving Indian Offshore Services Environment: Greater Scale, Scope and Sophistication," Sloan Industry Studies Working Papers, Number WP-2007-34, 2007, available at http://www.industry.sloan.org/industrystudies/ workingpapers/index.php; accessed October 25, 2007.
|
From page 83... ...
2007. "Corporate Brochure," available at http://www.telsima.com/pic/ pdf/download/Corporate_Brochure.pdf; accessed June 20, 2007.
|
From page 84... ...
In semiconductor fabrication China is a minor player, although with the facilities already announced or under construction in 2006, its production capacity could approach 10 percent of worldwide wafer production.110 Much of this foundry capacity competes directly with Taiwan, not with U.S. manufacturers, and little of it will be at the most advanced levels of technologies.111 Software and Services The Chinese software services industry is much smaller than its Indian counterpart.112 According to the Chinese Software Industry Association, there are 300,000 workers employed in more than 6,000 firms; of these workers approximately 160,000 are software professionals, about 25 per firm.113 According to the Ministry of Commerce, the revenues of the Chinese IT and software services industry increased from $7.17 billion in 2000 to $19.35 billion in 2003.
|
From page 85... ...
119"China Becomes Japan's Biggest Software Outsourcing Base," Xinhua, April 12, 2007, available at http://news.xinhuanet.com/english/2007-04/12/content_5968762.htm; accessed June 22, 2007. 120Organisation for Economic Co-operation and Development, "China Will Become World's Second Highest Investor in R&D by End of 2006, Finds OECD," 2006, available at http://www.oecd.org/document/26/0,2340,en_2649_201185_37770522_1_1_1_1,00.html; accessed June 22, 2007.
|
From page 86... ...
Given China's expanding labor pool of low-cost engineers, multinational corporations experiencing pressure on margins are likely to expand their engineering activities there.125 In terms of R&D, China is rapidly increas 121Xiaohong Quan, "Multinational Corporations' R&D in China: IP Protection and Innovation for the Global Market," PowerPoint presentation, November 29, 2005, available at http://iis-db.stanford.edu/evnts/4317/Xiaohong_(Iris) _Quan_presentation.pdf; accessed June 22, 2007.
|
From page 87... ...
By the late 1990s, Taiwanese firms were assembling not only desktop PCs but notebook computers as well.
|
From page 88... ...
• In 2001, the Apple iPod was introduced, forever changing the music and entertainment landscape: by 2006, 20 percent of adult Americans had an iPod. • Over the past decade, cellular telephones and handheld devices have launched a new form of "mobile" communications, connecting people through voice and data applications no matter where they are: in 2006, 73 percent of adult Americans had cell phones, and 11 percent had a handheld device.127 126Clair Brown and Greg Linden, "Semiconductor Engineers in a Global Economy," in National Academy of Engineering, The Offshoring of Engineering: Facts, Unknowns, and Potential Implications, The National Academies Press, Washington, D.C., 2008, pp.
|
From page 89... ...
However, this pattern has been changing, as customers are increasingly creating value through IT application innovations in industries including health care, professional services, financial services, manufacturing, retail, media and publishing, and education.129 As a result of the co-evolution of business and IT, the IT R&D ecosystem is becoming increasingly linked with R&D in the wider global economy. The significance of multifaceted innovation to IT has increased significantly during the study period 1995 to 2007.
|
From page 90... ...
, creating service offerings that can make a firm's products less commodity-like, and making service 130 Section 1005 of Public Law 110-69 (the America COMPETES Act of 2007) calls for the Office of Science and Technology Policy, through the National Academies, to conduct a study and to report to Congress on "how the Federal Government should support, through research, education, and training, the emerging management and learning discipline known as service science," which is defined as "curricula, training, and research programs that are designed to teach individuals to apply scientific, engineering, and management disciplines that integrate elements of computer science, operations research, industrial engineering, business strategy, management sciences, and social and legal sciences, in order to encourage innovation in how organizations create value for customers and shareholders that could not be achieved through such disciplines working in isolation."
|
From page 91... ...
. Thus both suppliers and their customers have ample new opportunities to innovate in underlying technologies, in product- and service-delivery models, in new business models, and in new product and service offerings.
|
From page 92... ...
Both consumer demand and enabling infrastructure are necessary: for example, it is pointless to demand video on a cell phone if the wireless infrastructure cannot support it, or to expect home health care delivery offerings to prosper if broadband penetration is low (see the subsection below entitled "Broadband Speeds and Capabilities" for examples of bandwidths needed to support particular functionalities)
|
From page 93... ...
pdf; see also Markle Foundation, Creating a Trusted Information Network for Homeland Security, New York, N.Y., December 2003, at http://www.markle.org/downloadable_assets/nstf_ report2_full_report.pdf; both accessed August 28, 2007. See also Jonathan Marino, "DHS Tech Chief Wants Broadband for First Responders," Government Executive, March 15, 2007, available at http://www.govexec.com/dailyfed/0307/031507j2.htm; accessed October 18, 2007.
|
From page 94... ...
Thus the government does not serve as an effective "lead customer" to spur development of new and innovative commercial technologies and products. • In cooperation with the business school INSEAD, the World Economic Forum produces The Global Information Technology Report, which 140This is the subject of an ongoing National Research Council (NRC)
|
From page 95... ...
(However, the United States was cited for maintaining its "primacy in innovation, driven by one of the world's best tertiary education systems and its high degree of cooperation with the industry as well as by the extremely efficient market environment.") See World Economic Forum, "Denmark Climbs to the Top in the Rankings of the World Economic Forum's Global Information Technology Report 2006-2007," Press Release, available at http://www.weforum.org/en/media/Latest%20 Press%20Releases/gitr_2007_press_release; accessed July 18, 2007.
|
From page 96... ...
The IDC's computer index includes PCs per household, IT spending as a fraction of GDP, IT services' contribution to GDP, and software spending; the telecom index includes the number of broadband households, wireless subscribers, and handset shipments. See IDC, "IDC's Information Society Index," available at http://www.idc.com/groups/isi/ main.html; accessed July 18, 2007.
|
From page 97... ...
Because of this the 150See TechNet, A National Imperative: Universal Availability of Broadband by 2010, January 15, 2002, available at http://www.technet.org/resources.dyn/2002-01-15.64.pdf; accessed June 27, 2007.
|
From page 98... ...
Atkinson, The Case for a National Broadband Policy, The Information Technology and Innovation Foundation, Washington, D.C., June 2007. 152National Telecommunications and Information Administration, Networked Nation: Broadband in America, U.S.
|
From page 99... ...
See "Rural Health Care Pilot Program," available at http://www.fcc.gov/cgb/rural/rhcp.html; accessed October 18, 2007. b"All Other" includes synchronous digital subscriber line (SDSL)
|
From page 100... ...
cable providers. However, Japanese industrial policy also plays a role: the Japanese government used subsidies, tax incentives, and regulation to promote high-speed broadband deployment: • Government subsidies and tax incentives reportedly spurred Nippon Telegraph and Telephone Corp.'s (NTT's)
|
From page 101... ...
157TeleGeography Research, "Global Bandwidth Research Service: Executive Summary," Washington, D.C., 2008, available at http://www.telegeography.com/products/gb/index. php; accessed October 31, 2008.
|
From page 102... ...
. 163California Broadband Task Force, The State of Connectivity: Building Innovation Through Broadband, January 2008, available at http://www.calink.ca.gov/taskforcereport/; accessed March 17, 2008.
|
From page 103... ...
[standard definition Internet Protocol television] File Sharing (small/medium)
|
From page 104... ...
In the process, the world experienced the largest venture capital investment bubble in history and an accompanying dramatic stock market bubble. The bubble may not have been entirely negative, because major new firms were created and the ways that people work and play were transformed.
|
From page 105... ...
With this change came a globalization in which, for the first time in history, engineers even in developing nations became more capable of being integrated in the global economy. By discussing India and China -- two growing, potential IT industry giants -- in particular, the committee places the situation of the U.S.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.