Top Industry Players

The industry's top players are spending heavily to position themselves for a new economy that is fast approaching us.

Let's now examine what the largest companies are putting together as priorities for the upcoming years. The few top companies with the most innovative technologies and the most aggressive strategies are positioned to increase their revenues and profits with innovation.

According to sources and publications, the large companies plan to revolutionize their own markets and technologies before competition. We are observing that corporate spending on information technology has been increasing. Market researcher IDC estimates tech spending will rise 2.3 percent this year. For example, the Merrill Lynch index of the top 100 tech companies has increased 38 percent since the start of 2003. In the 1990s, technology was the glowing engine of economic growth. Tech's share of GDP rose from 3.2 percent in 1990 to 4.9 percent at the peak in 2000 -- and still accounts for 4.2 percent. Economists credit tech spending for at least one-third of the productivity gains in the second half of the 1990s. According to David A. Wyss, chief economist for Standard & Poor's, it's contributing to abnormally high productivity growth in an economic slump. Innovation will play a key role in the economic recovery. (45)

According to a 2002 study of U.S. companies during the 1990–91 recessions by McKinsey & Co., the companies with the strongest stock sustainability and appreciation after the recession launched major initiatives during the downturn. Most of their investments were focused on innovations and acquisitions. We are observing that the 10 richest companies hold a total of $130 billion in cash. (102) IBM, Dell, Verizon, Nokia, and Microsoft all are making strategic but aggressive moves. Some companies are trying to transform the industry.

Microsoft

Microsoft possesses $46 billion in cash as it moves into such new markets as collaborative. Microsoft strategy is to get customers passionate about technology again. The company is spending a lot of money into the next version of its Windows operating system, code named Longhorn, due in 2005. As its PC software business slows, Microsoft is moving beyond its mainstay corporate market into new fields such as video game players. This will force Microsoft to become a different company.

SAP

German firm, SAP, is providing a platform for other businesses to build on, and make their own technologies more attractive to customers. It has technology that makes it easier for smaller companies to create innovative applications on top of its basic applications for managing corporate finance and manufacturing.

IBM

IBM is pushing a radical vision it calls on-demand computing. The idea is that it will offer computing power to corporate customers as a service, whenever they need it, with all the reliability and simplicity of electricity. CEO Samuel J. Palmisano is reshaping the entire company around the idea and spending $1.6 billion on research and development this year for on-demand products. Sam Palmisano thinks the answer is to make computing simpler, and to shift the burden of managing tech systems from corporate customers to experts, such as IBM. This concept is called EBusiness on-demand computing. Most of the complexity can be removed by using software to better stitch together applications and computers, and to deliver computing power to customers via the Internet. The focus is to sell computing as a service. IBM vision is very ambitious in this space, and it introduces technologies that enable sick computing systems to heal themselves and that tap into grids of computers, as needed, for processing power and data-storage capacity. If this strategy works out, IBM will be able to get a steady revenue stream and customer lock-in.

Sony

Japan's Sony Corp. is investing around $3 billion over the next three years on new chips for devices in the digital home of the future, enabling a fusion of computing, Web surfing, electronic games, music, and videos on easy-to-use home networks.

Qualcomm

Qualcomm Inc.'s latest chips and software already are focused on the arrival of next-generation mobile phone services, including the ability to shoot videos with cell phones and instantly transmit them to friends or business associates

Nokia

Nokia is putting some of its $11.4 billion to design new mobile phones. It spent $3 billion on research and development in 2002, up 18 percent since 2000. It is pushing the market with a variety of new products. As an example, one of them is N-Gage, a mobile phone that doubles as a portable game console.

Intel

It is moving to a higher value chain. It is aiming at entirely new markets, such as cell phones, handheld computers, and networking gear, whose much larger volume could make up for their lower profitability. It also has vowed to give each chip wireless capabilities.