E-Business Commentary -- Innovation Goes Global

Dec. 21, 2004
The U.S. hasn't lost its creative edge. Rather, other countries have joined the fray.

Don't be fooled by the naysayers who claim the sky is falling on U.S. technological innovation. While the U.S. may not dominate the world of technological creativity as it once did, American innovation remains second to none. The fact is that high-tech innovation has exploded, becoming a global phenomenon that, like the Internet that has helped propel it, knows no national borders. You may have heard some of the arguments of these Chicken Littles, a flock whose common chant is, "the U.S. is falling behind." They point to the fact that Japanese companies create most of the cool new game gadgets. Witness Sony Corp. and its powerful PlayStation. Nokia Corp.'s cell phones let you carry the Internet and e-mail with you, whether you're vacationing with the family or doing lunch in the city with a client. The U.S. remains too personal-computer-centric, they say, while the world continues to shift to simpler, less costly, more mobile Internet "appliances." Europeans enjoy more fancy features in their cars -- such as cell phones built into the steering wheel -- and in their everyday lives in general. In software they warn that Windows is beginning to give ground to Linux, which, as we all know, was hatched across the Atlantic. While it's true the U.S. no longer has a lock on high-tech innovation, America remains the Mt. Olympus of technology, both as a source of creativity and its chief marketplace. Sure, the U.S. didn't create Linux, but IBM, Computer Associates, Oracle, and Red Hat, by embracing it and creating applications to run on it, have done much to make it a successful market alternative to Microsoft Corp.'s Windows NT and its successor, Windows 2000. Similarly, France was first with a national Internet-like system, connecting both consumers and businesses with its ubiquitous Minitel terminals back in the 1980s. Unfortunately, the French built their Internet to be proprietary, so that it wouldn't work with any other systems. It took the Americans to come along and create a truly open Internet, as well as the browser-an easy-to-use interface to promote the Web's use-thus allowing the 'Net to become an international communications tool like the telephone. Admittedly, there is some truth to the claim that the U.S. has been stuck on PC technology. For the last two decades, business has depended on the PC not only for business applications but also to connect to corporate networks and the Web. And American firms are still creating new appendages for the PC, such as Agilent Technologies' invention of the "trackless" mouse (licensed by Microsoft). In software, America continues to set the pace. For instance, i2 Technologies Inc. of Texas and Oracle Corp. of California have been swift to provide new software that connects companies through online trading exchanges, while Germany's SAP AG lagged the market. Perhaps more important, the U.S., unlike any other nation, has spawned a huge and varied software industry. Many of these companies, of course, are the dot.coms, creating software to support business and consumer use of the Internet. Even so, there are thousands of other small and midsized firms built around innovative software designed to solve specific business needs or issues. For instance, Siebel Systems Inc. practically wrote the book on customer relationship management software, a hot new application. And i2 started out as a maker of production scheduling software, an arena it pioneered along with a handful of other U.S. software companies. In the microchip field, innovation is a global phenomenon, but American firms are no slouches. Last year, IBM's tiny Microdrive, a hard disk the size of a matchbook with a 300-MB storage capacity, won an IndustryWeek Technology of the Year award. The Microdrive is used in various electronic devices, including digital cameras and cell phones. Another innovation, IBM's CoreConnect, is a development platform that several chip-design firms are using as a standard so they don't have to reinvent the wheel each time they set about designing a new product. In sum, America is not losing its edge in the battle for high-tech leadership. But instead of having the high-tech arena all to itself, the U.S. must now compete with the rest of the world.

Doug Bartholomew is an IW senior editor based in San Francisco.

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