Inside the Labs at Microsoft, HP and IBM

At Microsoft, Hewlett-Packard and IBM, investment in research and development is a reflection of corporate culture. This three-part piece examines the different approaches taken by each of these influential tech companies. Hewlett-Packard prides itself on its pragmatism, while Microsoft holds the flag of basic research aloft -- and IBM continues to file more patent applications, year after year, than any other tech company.

HP Labs: Inventing ways to do more with less

by James Niccolai

HP Labs has seen some big changes in the past few years. In 2007 it hired Prith Banerjee, the dean of engineering at the University of Illinois-Chicago, as its new director. A year later the labs started to narrow its focus from the 150 or so projects its scientists had been working on to 20 "big bets" -- projects that, if they paid off, HP hoped would contribute directly to its bottom line.

The labs had lost its focus, with researchers squirreling away in small groups on projects that, while interesting, didn't always serve HP's wider goals. Banerjee calls the new approach "innovation with purpose." He has arranged the big bets around eight broad areas that HP sees as core to its future, including analytics, data management, intelligent infrastructure, sustainability and, of course, the cloud.

Banerjee brushes off the recent criticism that HP Labs may be underfunded. Last fiscal year the company invested 2.5 percent of its total revenue in R&D, compared to 6.1 percent of revenue at IBM and 14 percent at Microsoft. That's still $2.8 billion, however, of which the labs budget is only a fraction -- in 2008 it was $150 million. The vast majority is spent on later-stage development in HP's product groups.

"People get all hung up on this percentage of revenue figure, but I could spend a ton of money doing completely useless research and development," Banerjee said in a recent interview. "It's the research output that matters, not the amount of dollars you put in."

Plus, he says, the labs devotes more of its resources today -- about one third -- to basic exploratory research that may not pay off for five or 10 years, in areas like nanotechnology and quantum computing. That's up from 10 percent a few years ago. Another third is for applied research, which covers fundamental technologies like compression that can be applied to multiple product areas, and the remainder is for research tied to specific products that could pay off in as little as a year.

Displays are one big focus for the company. HP doesn't manufacture displays, but it sells around 70 million of them each year in PCs, printers and other products. If it could come up with a radically cheaper way to make displays, HP could license the technology to others and also lower its own product costs, says Carl Taussig, director of HP's Information Surfaces Lab.

To do that it is trying to come up with a completely new manufacturing technique. Today, displays are produced essentially one at a time, using a photolithography technique similar to that used for semiconductors. But Taussig and his team have been developing a "roll-to-roll" process that allows manufacturers to almost literally print circuitry onto screens one after the other.

The process could go into production for certain types of screens in as little as two to three years, he said. HP has custom-built machinery running in its labs that can "print" displays at 5 meters per minute from long sheets of a thin polymer material that resembles aluminum foil. HP's breakthrough was to invent an imprint lithography process that allows the circuits to be layered on top of each other on the flexible screens but still stay in perfect alignment, Taussig said.

LCDs cost about $100 per square foot to produce today, and the roll-to-roll method could reduce that to $10, he said. Of course, the big display makers are working on similar technologies, and one challenge for HP will be getting the technology out of its lab and into at least small-scale production in order to show that it works.

Printing, not surprisingly, is another focus, but not the type found in homes and offices. Most of the optimization for those products has already been done, so the labs are focused instead on digital commercial printing presses, a fairly new area for HP where it hopes to challenge the incumbents, said Eric Hanson, director of HP's Commercial Print Engine Lab.

The labs have already developed a new type of ink for HP's Indigo digital press. Hanson wouldn't reveal anything about the newer presses HP is developing except to say they are making "good progress." But he was keen to show off a technology that could help smooth the industry's transition from analogue to digital printing, and thus eventually help HP to sell more equipment.

One obstacle for the industry is that paper mills don't have an efficient way to remove digital ink from all types of paper -- something they need to do when they recycle magazines and brochures to make new paper. So one of Hanson's team, Hou Ng, has developed a "surfactant" that allows digital and other inks to be skimmed off in a foam after the pulping process.

HP plans to give away the formula so that other companies can produce the chemical, Ng said. The idea is remove any obstacles that could prevent the digital print market from expanding.

The Labs' narrower focus doesn't mean it works only on projects tied to HP products. HP doesn't design its own server chips any more, for example, but it continues to invest in microelectronics. In August it announced a partnership with Hynix to commercialize a new memory technology called memresistor that derives from work in HP Labs.

The labs also contributed a video compression technology for HP's Halo and Skyline videoconferencing systems, and its on-demand magazine printing service, MagCloud began as an idea in HP labs. The labs also helped develop HP's ePrint service, for printing from any e-mail device to a printer anywhere in the world. It's also finding ways to bring research to market through its services arm, including a MEMs sensor technology being used by Shell for oil exploration

As part of the effort to make HP Labs more efficient, its researchers must now submit longer pitches that include a business proposal when they are seeking funding for new projects. The pitches are reviewed by business people and technologists within HP product groups as well as by other scientists.

It has also been working to get technologies to market more easily. For instance, HP created a spin-off company to help prove the effectiveness of its roll-to-roll display manufacturing process. It's designed to solve what Taussig called "the jumping the chasm problem" -- getting a new technology from the labs into widespread use.

"That's a missing piece that we haven't always done very well here," he said. "We're trying to move ourselves into something that's more like a manufacturing environment than an R&D environment. It's not easy for researchers to get that type of discipline, but we're getting better at it."

Microsoft: Keeping the focus on pure research

by Nancy Gohring

Leaders of Microsoft's research group sometimes speak with nostalgia about the glory days of computer science research, when labs like the revered Xerox Palo Alto Research Center and Bell Labs worked on ambitious projects.

Most of those famed institutions are gone or are shadows of their former selves, victims of budget cuts and investors who demand that every dollar be clearly earmarked toward development of profitable products.

While its research group never quite ranked among those famous labs, Microsoft likes to boast that it's one of the few remaining public companies that still do pure research, including kinds that might not turn into products for many years.

"Many of the other companies that used to have research labs, in previous downturns they told their labs to focus on doing something incremental, to fill gaps in their product lines," said Andrew Herbert, managing director of Microsoft Research Cambridge. "The track record is that people who are good at research aren't good at product development. If researchers get under the feet of people who are good at doing product engineering, it doesn't work very well. The labs get demoralized if they aren't doing interesting research and it all goes away."

Despite the economic downturn, Microsoft views research as critical to its future. In fact, it says that pure research is especially important during downturns.

Next page: Astronomists and ethnographers

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