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Notes
from the Bleeding Edge
This week’s edition of E-news takes a look at various stories from the world of high technology. What is happening out there at the leading edge of technology innovation, and what does it mean for entrepreneurs and for the rest of us? Some snapshots are below:
Nanotechnology: Still Waiting for a Breakthrough
While everyone seems to refer to nanotechnology as an “industry of the future,” venture capitalists (VCs) still aren’t buying into the hype. A recent article in Small Times, a magazine covering nanotech, looks at the phenomenon. The basic message is clear: VCs invest in marketable products and few nanotech firms have such products yet. As a result, a number of industry observers expect it may be many years before major VC investments in nanotech take place. Meanwhile, VCs are aggressively investing in biotechnology. Overall life sciences investments in the first half of 2003 have totaled $1.8 billion. Given this interest in the life sciences, investors predict that firms who merge developments in both nanotechnology and biotechnology may offer the most likely candidates for new
nanotechnology-related investments.
What’s Hot in IT and Telecom?
The corpses of countless wireless start-ups may be evidence that betting on success in the telecom market makes little sense. But, as wireless and other technologies advance, lots of cool and interesting new markets are developing. Both the Economist and the Wall Street Journal have recently published detailed looks at the telecom sector and some of the “hot” sectors. New studies from Boston-based AMR Research point to supply-chain management as a key growth area. Firms like Wal-Mart are embracing the use of radio-frequency identification (RFID) as a replacement for traditional bar-code technologies. These new technologies will not only streamline business processes; they could constitute a multi-billion dollar market for RFID suppliers. Voice over Internet Protocol (VOIP) is another hot technology prospect. Firms like Vonage and Net2Phone are making quite a splash with new Internet phone services. As broadband deployment surges, more and more such services will become available and other firms (start-ups and large players) will begin targeting the market. In-Stat/MDR, a market research firm, predicts that the proportion of US businesses using VOIP will rise from the current level of 2 percent to more than 19 percent by 2007. Cisco, a major market player, is seeing its sales of VOIP equipment grow by 35 percent per year; it just shipped its two millionth VOIP telephone. Meanwhile, cable companies and other telecom players are getting into the game. Expect a lot of interesting activity in this market space in the coming years.
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Studies from AMR Research can be accessed at
www.amrresearch.com
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Studies from In-Stat/MDR can be accessed
www.instat.com
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The Wall Street Journal’s Special Report on Telecommunications appeared in the October 13, 2003 edition. For more information, visit
www.wsj.com
(subscription is required).
IT: Where the Future Jobs Are
If you listen to some pundits, you’d think that all future information technology (IT) work will be done in India or Russia and that Silicon Valley’s IT leaders are going to start looking more and more like the Big 3 automakers. A new report from the Sloan Foundation-supported IT Workforce Data Project says that while these aren’t the best of times, they’re not the worst of times either. The short study reviews new data and reports on the IT workforce and tries to predict some future trends. Some analyses, including one by the federal Bureau of Labor Statistics, project continued growth in IT jobs through 2010. But, more recent industry reports are more pessimistic. Industry consolidation and offshore outsourcing are creating a challenging job environment for IT workers. The issue of how US engineers compete with the foreign “$800 a Month (or Less)” engineer is becoming a hot issue, not only in the IT field, but on the campaign trail as well. Look for further debate on this topic in the coming months.
The Innovator’s Solution?
A few years ago, Harvard Business School Professor Clayton Christenson made a name for himself with his book, The Innovator’s Dilemma, which argued that large successful firms face nearly insurmountable difficulties in exploiting and responding to new disruptive technologies. That book received a lot of attention, but it also led many large firm managers to simply throw up their hands in despair. Now, in a new book (co-authored with Michael Raynor), The Innovator’s Solution, they offer some tips on how big firms can respond to disruptive technologies. The key lesson is that firms must create formal processes and organizations whose sole mission is to identify disruptive technologies and quickly insert these technologies into the businesses ongoing processes, products and services. That is often easier said than done. Moreover, the authors note that no firm has been able to create a “disruptive growth engine.” In other words, companies may be able to respond to a single (or a few) disruptive technology, but to do so on a long-term, sustained basis is nearly impossible.
If Christenson and Raynor are right, new niches for start-up entrepreneurs will likely always be present as new disruptive technologies emerge. But, how should new firms proceed? Some excellent tips can be found in a recent article in TechyVent Pittsburgh, an on-line newsletter distributed by the Pittsburgh Technology Council. The article profiles four firms who have tried to break into new markets with disruptive technologies. There seems to be no one strategy that works best. Each firm tried a different method, ranging from formal partnerships with incumbent firms to “flying under the radar” by targeting niches avoided by big competitors. The good news is that success is possible, regardless of one’s chosen strategy.
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The article,
Introducing Market Disrupting
Products (www.imakenews.com/techyvent/index000039765.cfm), appeared in the October 2, 2003 edition of TechyVent Pittsburgh.
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The book, The Innovator’s Solution: Creating and Sustaining Successful Growth (Harvard Business School Press, 2003), is available at major bookstores and on-line retailers.
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State Science
&
Technology Institute
5015 Pine Creek Drive
Westerville, OH 43081
Phone: (614) 901-1690
Fax: (614) 901-1696
www.ssti.org
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While we’re on the subject of technology, let us highlight an interesting organization whose mission is to get states excited about technology-led economic development. The State Science and Technology Institute (SSTI), headquartered in Ohio, is a national membership organization of practitioners and policymakers seeking to improve their economies through science and technology.
If you are interested in building a technology-based economy, SSTI is a good place to learn about effective practices. In addition to producing excellent research, SSTI publishes a weekly newsletter that covers science and technology-related news. Their annual conference is also widely recognized for its excellent speakers and presentations. This year’s version occurs this week on October 21 and 22 in Seattle.
If
you have suggestions for future SPOTLIGHTS, please send an e-mail
to spotlights@pfidc.org.
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