The Scientists Behind the Headline

“Obama Promises Major Investment in Science” – AP News story (April 27, 2009)

“The bottom line is that if you’re a fan of new technologies being developed on US soil, you should be pretty damned excited.” – Alex Koppelman, writing in Salon.com

President Obama announced today an effort to increase the nation’s investment in research and development spending for the sciences and new technologies.  As Alex Koppelman points out:

One particularly striking point to note about this: That level of funding [an increase to ‘more than three percent of GDP’] would almost meet the amount of money spent on defense. To some extent, that may simply represent a shift in where on the budget certain funds are accounted for, as defense spending has always been a key driver of American scientific research, but it’s still a sharp difference from the normal state of affairs.

I’ve written before (“How to Find Research“) about the need for increased R&D spending, and about the role of the White House Office of Science & Technology Policy in its main role: advising the President and others within the Executive Office of the President on the impacts of science and technology on domestic and international affairs.

OSTP does the hard work – but it is guided in part by the President’s Council of Advisors on Science and Technology, or PCAST.  This group can be a quiet backwater – as it has been on and off for years – or it has the potential to be a dynamic leading voice in advising the Administration on S&T policies, particularly in investments in scientific research and tech innovation.

It looks like we’re on the dynamic upswing, given that President Obama also used today’s high-profile announcement to name his appointments to an all-new PCAST. 

Place your bets on research

No reason to sugarcoat the Microsoft quarterly financial report issued this afternoon: it reflected the bad news in the overall economy.  Revenue down, earnings down, profits down. 

What I did find most interesting was the silver lining as Business Week points out in its coverage. Like most of Wall Street apparently (MSFT stock rose in after-hours trading), Business Week was impressed with some of the positive steps taken by the company:

Maybe the most striking news is Microsoft’s crisp cost-cutting. Who knew this Midas of the computer industry knew how to scale back so well? In the quarter, administrative costs fell by more than $1 billion, from $2.3 billion to $913 million. And the company completed its first ever general layoff, of 5,000 people. The company did not cut into its R&D budget, however. Spending there rose from $2 billion to $2.2 billion.”

It’s that last point that I’m focusing on, as it demonstrates that the company is living up to CEO Ballmer’s pledge to increase our annual R&D spending – amid this deep recession – from $8 billion a year to over $9 billion.

At a time when most budgets are hurting, that’s quite an investment.  If you’d like to know what we’re getting for that, check out http://research.microsoft.com, or for the most up-to-date reports, use Twitter to follow @MSFTResearch – this week, the Twitter feed has focused on papers and demonstrations we’re presenting at the 18th International World Wide Web Conference (WWW2009).

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Crisis? Pshaw. Be Bold with Research Investments

Bottom line: The smart companies will weather this fiscal crisis by “steering into the skid,” and actually increasing their investment in the future.

One of my last pieces of advice to DIA’s director before leaving last year was to increase the amount of money annually invested in IT research and innovation. DIA’s technology budget was typically too bloated on the side of operations and maintenance for current systems, and not investing enough in the future, though during my time there we had made significant progress in redressing that, increasing the resources (people and money) put against “what comes next.”

In government-agencies particularly (and many torpid commercial enterprises also), budgeteers make the mistake of throwing money at legacy systems instead of being bold and prioritizing research for the next generation of systems. (Last year I wrote about these issues in “Moving Money to the Left.”)

Now, no one has asked me about my views on the fiscal “bailout package,” which makes sense, particularly when there are people who make far more sense than me expressing their well-founded opinions in ways I thoroughly agree with – such as, say, Harvard economist Jeffrey Miron in his excellent op-ed piece for CNN last night (“Bankruptcy not Bailout is the Answer“).

But a number of people have asked me what the impact on Microsoft might be from the current “crisis” and market volatility.  I have to say that I’m pretty optimistic, precisely because Microsoft is investing in the future, in ways that are designed to carry us through short-term downtimes and on to exciting new platforms.  The company’s cash-rich, which helps. 

 Most importantly, our CEO Steve Ballmer firmly pointed to our increasing bet on our new approaches to the future.  Speaking in Silicon Valley, he said proudly that not only will Microsoft continue to buy about 20 innovative companies a year, but we will also keep spending $9 billion a year, or 14 percent of revenues, on internal research and development. (See the Venture Beat story here.) 

 

Microsoft “will use the slump as a chance to invest more in our future than the other guys we’re competing with” – Steve Ballmer, quoted in Bloomberg.com  

 

There are going to be winners and losers coming out of this slump, as there have been in each of the tech slumps I’ve seen in my short (!) life over the past three decades I’ve been involved.  The winners are inevitably those with a vision for the long term and the determination to plan beyond the horizon. 

Microsoft won’t be the only winner (see “Microsoft, Xerox Invest in Innovation” for a description of the Xerox CTO’s similar thoughts), but I’m convinced we will be in the front rank.

 

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Gartner sees Hype Cycle for Social Software

Fact: Gartner now says that “Web 2.0 software” is falling from its “Peak of Inflated Expectations” and is on its way to a “Trough of Disillusionment.”  However, Gartner finds that wiki software has traversed that path already and is now well on its way up again to mature enterprise acceptance as a valuable productivity tool.

Analysis: Gartner’s just released their 2008 “Hype Cycle” report on Social Software – you know, stuff like public virtual worlds and Web 2.0 tools.

(I don’t know the legality of republishing the actual chart itself, so I’m not including it; I use the Microsoft enteprise license to access Gartner research.  I do note that a Web 2.0 enthusiast from the Netherlands has already posted the new Hype Cycle chart another new and related Hype Cycle chart, on “emerging technologies,” as a Flickr image here. There’s great overlap between the two reports.)

I’ve written before about the usefulness of Gartner analyses; I have to admit that Hype Cycles are my favorites. There’s something about internally debating their judgment calls as your eye travels the path, from pre-adoption “Technology Triggers,” through the bubble-esque “Peak of Inflated Expectations,” and right down into the depths of the “Trough of Disillusionment.” 

If you’re an enterprise IT guy, in a CIO or CTO role or investigating/recommending/approving new technology investments, you really wind up focusing most time on the slow ascending climb to the right of the chart, what Gartner calls the “Slope of Enlightenment.”  Just as in the old days when corporate “data-processing” chiefs lived by the mantra “No one ever got fired for buying IBM,” today’s CIO’s rely on technology that has essentially graduated to Gartner’s “Plateau of Productivity.”

Several other initial observations on the chart:the two Hype Cycle charts:

• Newest disruptive technology trigger charted: “Erasable Paper Printing Systems,” something being researched by numerous large companies like HP and Microsoft as well as already in startup mode, but pegged by Gartner as still 10 years or more from mainstream adoption
• Microsoft’s Surface has achieved brand dominance, as Gartner puts “Surface Computers” on the rise in visibility
• Other key investments of Microsoft Research are validated with positive momentum ascribed to “Mobile Robots,” “Augmented Reality,” and “Green IT,” though only the last one is within 5 years of mature adoption
• “Cloud Computing” is still on the rise, not having peaked in hype yet, though many would find that hard to believe – with its Time Magazine cover last year, it’s practically reached the point of being satired on The Daily Show
• “Public Virtual Worlds” are right alongside “Web 2.0” in still heading down toward their disappointment trough
• Furthest to the right – meaning most mature and enterprise-worthy – is the seemingly venerable “Basic Web Services.”

I really like these reports for a number of reasons – among other things, it looking at them together makes clear the social aspect of a number of more mature technologies (Tablet PC, Electronic Paper) which I favor, and which too often are recognized only for their technical aspects, not the socially enabling and disruptive benefits within and across organizations. 

The Gartner report also allows the blogosphere and twitterverse to step back from the moment-to-moment faddishness of the social software sector, and reflect upon the larger context of the individual technologies.  One measure of health: not a single technology earned the dubious distinction of “Obsolete Before Plateau,” a mark of shame which Gartner regularly applies to technologies that are getting hype but show no longterm promise.

Taken together, the social software space appears robust and very, very interesting.  Get a hold of the full report, it’s worth it.

Note: post updated 8/12/2008 to add references to a second Hype Cycle report on “Emerging Technologies”

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Pentagon’s New Program for Innovation, in Context

FACT: According to an article in today’s Washington Post, the Pentagon has announced “the selection of six university professors who will form the first class of the National Security Science and Engineering Faculty Fellows Program. The professors will receive grants of up to $600,000 per year for up to five years to engage in basic research — essentially a bet by the Pentagon that they will make a discovery that proves vital to maintaining the superiority of the U.S. military.”

ANALYSIS: This new program is an innovation from DoD’s Director of Defense Research and Engineering (DDR&E), and since tomorrow I’ll be at Ft. McNair for a two-day conference sponsored by DDR&E on Strategic Communications, I’ll congratulate John Young and his staff for the good idea.

But the Post article falls short in two ways: one immediate (it leaves out key information about next year’s program and the upcoming deadline!) and one longer-term (it ignores the overall context of federal support for R&D).  I’ll fill in the blanks below.

A Quick Long-Term Analysis of GOOG, YHOO, MSFT

Fact: According to Forbes, writing after yesterday’s close of trading, “Unable to topple Google on its own, Microsoft is trying to force crippled rival Yahoo into a shotgun marriage, with a wager worth nearly $42 billion that the two companies together will have a better chance of tackling the Internet search leader…. Microsoft’s $31-per-share offer represented a 62 percent premium to Yahoo’s closing price late Thursday, although it’s below Yahoo’s 52-week high of $34.08 reached less than four months ago.”

Analysis: Most of the buzz about the Microsoft-Yahoo commentary yesterday was simply noise, bleating about the immediate impact (or not) on Google, as if the salience is a snapshot rendered in instantaneous who’s-up-who’s-down.  Yet I had a reader comment yesterday very perceptively on my post, saying “Whether the deal is timed well, overpriced or not, is for time to decide. Which may even take a couple of years!”

That got me to thinking about the value of these three companies over the long-term looking back.  Thanks to the web that’s easy to quantify, at least in terms of stock price; you can do it at MSN or on Yahoo Finance, but just for grins let’s do it at …