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MAKING IT BETTER: EXPANDING INFORMATION TECHNOLOGY RESEARCH TO MEET SOCIETY'S NEEDS
19. Combined R&D investments for these firms totaled $32 billion in 1998. R&D investments for all firms contained in the NSF survey of industrial R&D in the office and computing equipment, communications equipment, electronic components, communications services, and computing/data processing services industries in 1998 totaled $45 billion.
20. Many large IT firms were criticized in the 1980s and early 1990s for failing to take advantage of technologies developed in their own labs. Xerox, for example, developed one of the earliest personal computers (the Alto) but never successfully marketed it. See Smith and Alexander (1988).
21. Robert Metcalfe, a founder of 3Com Inc., has said that the value of the network scales as the square of the number of users. This is now called Metcalfe's law.
22. This is not to say that there will be no effort to displace the prevailing technology, as the open-source software movement and the Linux-based initial public offerings demonstrate.
23. Of course, there can be benefits to the rapid adoption of new technologies, and lock-in as well, in that they allow other innovators to build on top of a commonly accepted platform. It is only when limitations in the platform itself become evident and impede further innovation that lock-in becomes problematic.
24. Such companies have forced many of the traditional computer manufacturers, such as IBM, to streamline their PC operations, sometimes establishing them as separate business lines with their own cost structures.
25. A notable proponent of this theory is Christensen (1997).
26. For Motorola, which has roughly $30 billion in sales, this ratio would imply about $300 million in research funding.
27. For example, work in natural language processing has long-term goals, but it already has contributed to the grammar checker in Microsoft Office.
28. These activities correspond to SIC codes 7371 and 7373.
29. Andersen Consulting employs about 50,000 workers, so the research group represents just 0.4 percent of its workforce.
30. The information on Andersen Consulting's research activities was obtained from Joseph Carter, Andersen Consulting, in a presentation to the study committee in Palo Alto, California, on February 10, 1998.
31. The data on Lockheed Martin's R&D expenditures were obtained from B. Clovis Landry, vice president of technology, Lockheed Martin Information & Services Sector, October 11, 1999.
32. Personal communication from Irving Wladawsky-Berger, vice president of technology and strategy for IBM, October 6, 1999.
33. Amazon.com reported $47 million in product development expenses in 1998, most of which were related to continual enhancement of the features, content, and functionality of the company's Web sites and transaction processing systems, as well as investments in systems and telecommunications infrastructure. Merrill Lynch reported in 1997 that it would spend $200 million to complete the development of a technology platform for its financial consultants by the third quarter of 1998.
34. Needless to say, most of Boeing's $1.9 billion R&D budget is allocated to non-IT activities.
35. These data are from Amazon.com's annual 10-K report to the SEC.
36. Merrill Lynch reported in 1997 that it was investing some $200 million in the development of a new platform for its financial consultants called the Trusted Global Advisor system. In keeping with new accounting standards, Merrill Lynch amortized $72 million in development costs for internal-use software in 1998. These amounts are amortized over the useful life of the developed software (generally 3 years).