Ideas from Thin Air; the Golden Era of Pure Industrial Research Is over Everywhere, with One Giant Exception-Microsoft

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Byline: Sarah Sennott

You can't find your keys, and you're trying to retrace your steps. If you had a video record of your day, of course, you could pinpoint the moment the keys last left your hand. Though it sounds like an idle dream, a video memory recorder could have 1,001 practical applications. On a lonely night, you could curl up on the couch with a replay of your first kiss. Alzheimer's patients could recall when they last took their medicine. Careerists could review that last sit-down with the boss. But do most consumers (or their bosses) really want their every move on video?

Whether they do or not, engineer Lyndsay Williams has for years been working on just such a gizmo at Microsoft's Research Laboratories in Cambridge, England. The SenseCam is worn on the lapel like a badge, and it snaps 2,000 images a day. The camera tries to take a picture only when something's happening--it has sensors that detect movement and changes in temperature and light. And Microsoft has developed software that makes it possible to catalog and search through all the data. This summer Williams plans trials with patients from a local hospital suffering from memory loss. Don't expect to see the gadget on sale any time soon, though. "Microsoft has no plans to productize or launch the device in the near future," says Williams.

That kind of research for research's sake is typical; for years Microsoft has been bucking the trend toward smaller dreams and tighter budgets in R&D. Even now, in times of cost-cutting and slower growth, the company maintains a commitment to spending on new ideas and products that is rare, even spendthrift, by today's standards.

Nowadays rivals turn to alliances with universities, start-up companies and the occasional acquisition in order to develop new products. Microsoft's annual research-and-development budget, on the other hand, is $6.8 billion. The money funds about 700 of the world's best computer scientists, sociologists, mathematicians, physicists and engineers, spread out from company headquarters in Redmond, Washington, to Silicon Valley, San Francisco, Cambridge and Beijing.

While Microsoft says pure research keeps its products on the cutting edge, the risks of such an approach are well documented. The strategy is a throwback to the 1960s and '70s, when many high-tech leaders poured money into R&D, with a heavy emphasis on the R, and produced numerous breakthroughs. Engineers at AT&T's Bell Labs invented the transistor, the laser, the optical fiber, the touch-tone phone, the cell phone and the fax machine. Xerox's Palo Alto Research Center researchers came up with the computer mouse and the basis of today's computer operating systems.

Eventually these innovations made lots of money--but typically not for the companies that spawned them, or their shareholders. Most famously, Xerox breakthroughs laid the groundwork for Windows, the Microsoft cash cow. By the 1990s corporate downsizings had all but killed the notion that corporate research labs should be a kind of technological ivory tower, where researchers followed their inclinations no matter how far out or how expensive. The golden age of industrial research is over everywhere, except at Microsoft. "Microsoft's challenge is that it might do brilliant research but find it has no way for that research to get into the marketplace," says Henry Chesbrough of the Center for Technology Strategy and Management at the University of California, Berkeley. …