BIG BLUE ON THE MOVE
Despite a staid, men-in-blue image, IBM's R&D labs have always generated bleeding-edge ideas. Copper-wire microprocessors, RISC processors, and DRAM memory chips were all invented there. But too often it was other companies - Sun, Intel, Motorola - that profited from these innovations.
"We used to have fights over one esoteric semiconductor design versus another," recalls Paul Horn, a 17-year Big Blue veteran who heads IBM Research. "We had great research that didn't fit with our manufacturing plans."
That changed when Lou Gerstner became CEO in 1993 and started agitating the test tubes. Gerstner immediately chopped $1 billion from the R&D budget (the current budget is a still-healthy $5.5 billion) and then asked the division to focus less on pure research and more on ideas that had a chance of becoming salable products. Researchers were paired with product developers to find solutions to real-world problems. Today, at least a quarter of IBM's 2,900-strong research staff in its eight worldwide labs works directly with customers.
This approach has generated results. Take voice recognition. IBM spent decades trying to get computers to understand human speech. In the old days, this research surely would have languished in the laboratory. Now the tech-nology is found in IBM's inexpensive off-the-shelf ViaVoice software.
But voice recognition is peanuts compared to the company's disk drive business. Despite having invented the hard drive, IBM had no PC disk drive division until 1994. Today, thanks in part to new research into magnetoresistive heads, the unit generates $2.5 billion in revenue - about 3 percent of IBM's total sales.
But, hey, it's not all big ideas. In addition to disk drives, IBM's Nobel Prize-studded research team (five laureates) is building nano-scale integrated circuits.
So what's that vaunted brain trust up to now? Take a quick tour of the R&D sandbox below.
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