the State of R&D
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(no more than 5, please) provided proper credit is given to me, Kirt Blattenberger.
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Cog·i·ta·tion [koj-i-tey'-shun] – noun: Concerted
reflection; meditation; contemplation.
Kirt [kert] – proper noun: RF Cafe webmaster.
According to recent published
reports, overall research and development spending in the U.S. and around
the world by private businesses has been declining. At least in the
U.S., determining exactly how much of a publicly traded company's reported
R&D funds actually is applied toward real research is getting harder
because of a practice being used by companies like Microsoft whereby
stock options and issuances are thrown into the R&D expense column
in the financial ledger. There is a chance that the Securities and Exchange
Commission (SEC) will begin requiring all companies to abide by the
process. Only an act of Congress will prevent it from becoming law.
A common lament from both academic and corporate researchers is
the trend away from basic research and toward specific, "applied R&D,"
which is product-oriented research. As competition gets tougher, companies
feel they cannot afford to spend money on anything other than projects
that have some probability of improving the bottom line. Stockholders
have influenced the decision by criticizing and even threatening companies
with class action lawsuits for nonperformance when spending what is
deemed too much on frivolous research.
As with fundamental product
design and manufacturing, R&D is experiencing the globalization
thing. Many companies are relocating or building new research laboratories
offshore in order to exploit cheaper labor and lower overall costs of
doing business. A lot of the R&D dollars are being diverted from
U.S. and European universities and provided to schools in India, Taiwan,
China, and other such familiar countries. Massive amounts of technology
is being transferred by U.S. and European countries in this manner.
Test and processing equipment, software, and materials accompanies the
With all that in mind, here is an excerpt from
the IEEE Spectrum's 2004 survey of the world's top R&D spenders
(actually for FY2003). Topping the list this year is, Microsoft. Bill's
accountants reported $7.8B in R&D spending; however, $1.3B was paid
out as shares to its research employees. If not for the stock payout,
MS would have been in 4th place, assuming the three companies ahead
of it did not report stock issuances. The previous year, Microsoft was
only in 10th place, so creative accounting can really benefit a company's
Ford Motors Co. came in in second place with $7.5B in
R&D. The Pfizer drug company made 3rd, and DaimlerChrysler placed
4th. Coming in 5th with $6.2B is Toyota. General Motors, whose stock
borders on junk status these days, made 7th place (down from 4th the
previous year) at $5.7B. Sony comes in 12th at $4.9B and mobile phone
giant Nokia spent $4.5B to hit 13th place, and Intel followed closely
in 14th. Motorola (not including its Freescale spin-off), finished at
17th place; Freescale finished in 77th. Together, they would qualify
for 11th place. Hewlett Packard, out of which came Agilent Technologies,
hit 20th place with $3.7B in R&D outlays. Agilent placed 75th with
$1.1B, so together they would also have qualified for 11th place.
The U.K.'s BAE (British Aerospace), with a very strong physical
presence in the U.S., spent $3.0B for a 3first ranking spot. Japan's
Fujitsu is in 40th place with $2.3B. General Electric dropped a little
to 42nd place. Texas Instruments placed 50th with $1.7B in R&D.
NTT DoCoMo, the Japanese 3G phone service company, rated 70th place
with $1.1B. EMC Corporation made a precipitous drop from 84th place
to 100th place, with a "mere" $718M in R&D. See the November 2004
edition of Spectrum for more company rankings, or send me an e-mail
with the company in which you are interested.