R&D Trends in The Information Industry Jim Gray Microsoft Research Jim Gray NRC panel 2/9/98

Thesis Investment in R&D is shifting to Technology centers (e.g. Intel) Value added software (e.g. SAP) “Commodity” is an increasing part of Industry That part spends almost zero on R&D Total spending on R&D is rising Huge venture capital funding Huge investments by Technology and Software companies. Jim Gray NRC panel 2/9/98

IBM The Classic Computer Company R&D is 6% Was 12% in the past Jim Gray NRC panel 2/9/98

The New Computer Company 10% R&D or 2% R&D: which is the future? Jim Gray NRC panel 2/9/98

New Points In Spectrum EDS: never mentions R&D in Annual Report Intel spends heavily on R&D Jim Gray NRC panel 2/9/98

Software Companies are R&D Intensive 15% of revenues is typical Jim Gray NRC panel 2/9/98

Microsoft Research A strange case Net A young organization Attracts people who want to have impact Co-located with development organization Developers have embrace-and-extend mind set Microsoft is in the “feature” business. Net There is a very strong technology transfer story. Handsome payoff to investment so far. Jim Gray NRC panel 2/9/98

But Still Microsoft is doing long-term research on Speech recognition and synthesis Language understanding Vision & Graphics Programming language fundamentals Decision theory and recently: mathematics and statistical physics. Jim Gray NRC panel 2/9/98

The Future Research funding is projected to grow 3x in 3 years researchers about 5% of developers (wild guess) Research is open (minimal NDAs and such) There is a sense of optimism Endless frontier Increasing our support for university research. Jim Gray NRC panel 2/9/98

Specific Questions University cooperation: Done at a per-researcher level (not grand program) Very effective Usefulness of University Research: Students are wonderful Slow to respond to change (e.g. Internet, Windows,.. Focus on micro-problems, not systems or integration This seems inherent in the university system. IP issues are minor for us so far Jim Gray NRC panel 2/9/98

Specific Questions Government funding Fears? DARPA appears to be broken for CS. Funding seems to focus on Iron, not Software e.g. ExaFlops not great apps or middleware Cost of grantsmanship seems extra-ordinary Government never had great vision (MITI, …) and still does not. Fears? No, I am optimistic that VCs and Industry will do great things The system is working! Jim Gray NRC panel 2/9/98

Thesis Investment in R&D is shifting to Technology centers (e.g. Intel) Value added software (e.g. SAP) “Commodity” is an increasing part of Industry That part spends almost zero on R&D Total spending on R&D is rising Huge venture capital funding Huge investments by Technology and Software companies. Jim Gray NRC panel 2/9/98 research.microsoft.com/~gray/talks/NRC_Research_Investment.ppt