Market, profits drive innovation

INFORMATION TECHNOLOGY

By: Madeline Bayliss
   No one asked for a color TV.
   But consumers liked it enough to lead to a huge market that made color the standard in visual products.
   To Dr. Robert Bartolini, senior vice president for the commercial and international business of Sarnoff Corp., it is always the market that drives the value of technology.
   Sarnoff is the former RCA Laboratories, creator of numerous electronic, biomedical and information technologies. Some are created by contract with clients. Companies also founded by Sarnoff to bring the technologies to market manage others. There are 20 such companies in various stages of development.
   Dr. Bartolini sees the demand for technology in a number of areas. "In the present day economy, the only measure of continued success is profitability," he said. "Technology is being asked to help the cost and performance side of the business. Find a way to get a better margin or enable a lower price."
   He cited a recent experience with a semiconductor client. The company needed to protect its intellectual property but improve production. Using a new technique created by Sarnoff, the producers saved $100 to 150 per wafer — a quantum leap savings in an area where competitive bids are sometimes only dollars per wafer apart.
   Finding a technological solution to a commercial need often involves reapplication of existing technology. "We create innovation at the juncture of several technologies," explained Dr. Bartolini.
   Take the current focus on security, both commercial and governmental. Sarnoff announced in December new video intelligence capabilities for homeland security, emergency management and corporate security. It already sees applications for consumer products as well, but security is the priority in spending.
   The new capabilities combine live surveillance video with stored site models, adding GIS location information, intelligence and sensor data — in real time. This overcomes the traditional processing time — often hours — before video systems can integrate images and data. It enables a "fly-through" ability in assessing an entire scene. "Instant understanding equals fast response" is Sarnoff’s view of the technology’s value. There’s also the instant replay function built into the storage aspect of the system.
   Dr. Bartolini cited three other examples of technologies created long before they became commercialized. First was DNA, discovered in 1953. Not until this century did the biotech industry capitalize on it, creating other innovations for human, animal and plant biological applications. The credibility now assigned to DNA identification gives this technology a key role in the judicial process.
   Second were liquid crystals. Discovered in the 1960s, it wasn’t until the 1990s that applications in flat screens and other devices moved the technology beyond videos.
   Third were lasers, which arrived in 1960. In this case, it was only five years before applications were found, but the list keeps growing. Presentation pointers and supermarket checkouts are familiar examples. Civil engineers developed a use for a commercial level — and now a product is available in hardware stores for consumers.
   "A lot of funding in the defense establishment results in quality innovations for the commercial market," Dr. Bartolini noted.
   However, "there are some tough technical problems that companies are not willing to tackle on their own, even if it is believed the solution would have a big impact on the economy."
   A recent Trendsetter Barometer survey sponsored by PricewaterhouseCoopers confirms this reluctance. Executives of 403 of the fastest growing companies (over the last five years, with $5 million to $100 million in revenue) revealed a significant drop in the number of companies making new capital investment across the board of technology and innovation.
   Only 36 percent of the companies expect to make major new capital expenditures, compared to 52 percent in the first quarter of 2000. The number of companies planning increased spending is down in all categories:
• IT: 43 percent plan increased spending in 2003, compared with 59 percent in 2000;
• New Product Development: 39 percent plan an increase in 2003, compared with 58 percent in 2003;
• R&D: 19 percent in 2003, compared to 35 percent in 2000.
   The National Institute of Standards and Technology (NIST) already exists to provide funding and support for key developments. When the U.S. government mandated high definition television broadcast, Sarnoff partnered with NIST as well as Thomson, IBM, Philips and NBC to create the studio side of HDTV. This included the tools to create, transmit and manage a digital television operation.
   Despite his own company’s expertise in HDTV, Dr. Bartolini said the jury is still out on it. "Compare HDTV’s status, which was government driven, with direct TV’s success, which was market driven," he commented. "It’s at the intersection of availability of technology and market need that adoption gets driven."
   A key technological challenge today facing the commercial market, according to Dr. Bartolini, is developing "a more intelligent way to access bigger databases."
   "What is the process to use it, store it, file it and make it easy to get? How can we personalize this access through an intelligent network?" asked Dr. Bartolini as he framed the issue. "The use of artificial intelligence will come into play here."
   What is the next challenge on the horizon, in Dr. Bartolini’s view?
   "Hydrogen fuel. Today we are seeing all the factors around hydrogen fuel coming together: demand, market, environment, depletion of resources, political and economic. Eventually, they all wrap around the cost. It’s motivating the push for innovation. Throughout the ages and many changes in how we live, the common denominator is that we still light a fire."