Keeping the U.S. Computer Industry Competitive Defining the Agenda (1990) / Chapter Skim
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Pages 5-17
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From page 5... ...
For example, more than 60 percent of the world software market, totaling about $65 billion in 1989 and growing at an annual rate of about 25 percent, is controlled by U.S.based suppliers.! 2 Similarly, domestic enterprises and their overseas subsidiaries reap the majority of the global revenues earned for designing and integrating computer systems, a market whose annual value colloquium participants estimated to be between $25 billion and $40 billion.
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From page 6... ...
for all industries except one, software, which as an industry invested an average of 13.3 percent of sales revenues into R&D activities.5 High rates of technological advance, a hallmark of computer manufacturing, "change the structure of the industry in spans of 10 years or so," explained colloquium participant Richard S Rosenbloom, professor at Harvard University's Graduate School of Business Administration.
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From page 7... ...
By the early 1960s, the nation's infant computer industry was already active in foreign markets, earning about 25 percent of its total revenues from sales abroad.7 The success of world leader IBM, in particular, was a major catalyst in the decisions of foreign governments to shepherd the development of their fledgling computer industries. In 1966, for example, Japan's Ministry of International Trade and Industry designated the growth of the domestic computer industry as the number one priority for future economic growth.
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From page 8... ...
A strong dollar, local wage levels, and the absence of trade barriers are strong incentives for offshore manufacturing, according to Toole, but"none of these factors is within a company's control." Nevertheless, most colloquium participants said they expected offshore assembly of computer hardware to increase. Similarly, U.S.-headquartered companies are expected to invest more in foreign R&D.
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From page 9... ...
COOPERATION Colloquium participants repeatedly addressed the issue of cooperationcooperation between firms and among universities, government, and industry. Cooperative efforts abroad clearly stimulated examination of cooperation, but there was a strong perception that emerging technological and market challenges are creating a new mandate for cooperation in this country.
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Manufacturing may be done outside the United States using manufacturing, manufacturing-engineering, and assembly skills and foreign capital.
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Second, the government must be vigilant about trade barriers and other protectionist measures that other nations may take to nurture the growth of their computer industries. Many colloquium participants questioned whether some of the relatively
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From page 12... ...
They expressed optimism, but they noted that it was premature to judge the performance of this and other cooperative efforts in the computer sector. Regarding such efforts in general, Gordon Bell of Stardent Computer noted that cooperative research projects attract and sustain scientific and engineering talent.
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From page 13... ...
must be maintained and enforced, especially internationally, to ensure that the innovator receives appropriate return on investment. 13 Given the global push for standardization, all colloquium participants agreed, the issue cannot be ignored.
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From page 14... ...
govemment's influence extends over many of the important technological developments in computer hardware and software, sometimes creating marketing niches effectively exploited by IBM's U.S.-based competitors. For example, time-sharing, a product of work supported by what is now known as the Defense Advanced Research Projects Agency, was a boon to the Digital Equipment Corporation, whose PDP-6 computer was the first commercially available machine to offer the feature.
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From page 15... ...
In Congress, 9 of the 13 appropriations subcommittees are involved in determining the research budget and specific allocations. This fragmentation and the lack of a coherent perspective on the cumulative effect of actions taken by widely dispersed units within the federal bureaucracy pose serious obstacles to achieving the coordination and cooperation that colloquium participants, as well as the Council on Competitiveness and other groups, argue is needed.
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From page 16... ...
Some colloquium participants suggested that the nation has a governmentdirected industrial policy, in the form of a composite of fragmented decisions in areas ranging from defense spending and overall government procurement to antitrust laws. Moreover, several studies suggest that the success of strategically chosen industrial sectors in nations with such policies stems from factors other than direct government intervention.19 While it can be difficult to sort out the nature and impact of government actions in the United States as well as abroad, the computer sector must not be a passive observer in the policymaking process.
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From page 17... ...
19. "Even in Japan and France, countries where the state is reputed to shape the industrial structure in accordance with some national strategic vision," reported the MIT Commission on Industrial Productivity, "some of the most recent research is far more skeptical about the actual influence of state policy and more inclined to emphasize the role of private actors." (Dertouzos et al., Made in America, 1989, p.
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