Innovation Labs

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Corporate labs yield breakthroughs now that the start-up world is starved for capital.

If the technology industry caused the world's greatest wealth creation, then soon after it also caused the greatest wealth destruction. But even amid this bitter climate and dour market, rapid innovations in technology are continuing apace.

New markets are being born and new efficiencies are being created, even as technology companies go bankrupt at alarming rates. Smart companies have learned their lessons well. Previously, any company late to the Internet, to mobile communications, or even to the simple desktop computer paid a high price. Not only did the end business get sideswiped but a company's internal efficiency was often severely outmatched. Think about the advantages of a company with computers up and running over competitors without them. Or recall the fate of those brick-- and-mortar companies that didn't take the Web seriously until online operators cannibalized their sales.

That's why keeping abreast of all the developing technology should always be a serious priority for a CEO, particularly at companies known to be in the forefront of technical design and innovation.

In recent years, many of the world's major technological advances could be found in many start-up businesses. New companies, often backed by venture capitalists and other individuals ready to take financial risks, rode the technology boom. But now, with capital drying up in the start-up world, those looking for breakthroughs in thinking and in technology have circled back to the old guard. That's where the innovations came from before, so why not look at those laboratories to see what the next breakthroughs might be. "Some of the smartest people in technology are now in these labs," says Paul Vabakos, a venture capitalist at Trinity Ventures, a Silicon Valley-based venture capital firm which invests in early-stage technology.

The future of technology is in the laboratory. At four respected companies, life-altering inventions such as the personal computer, the pocket calculator, the copier, and computer networks were devised, refined, and patented. These innovations not only changed the way people live and conduct business but also became profitable ventures for their companies and shareholders. Here's a look at what researchers at these major labs are working on and where they think the next breakthroughs will be.


A stroll through the main laboratory of this technology powerhouse in Palo Alto, CA, tells the quintessential Silicon Valley story. Near a mockup of the barn in which the company was started 62 years ago are the reminders of dozens of groundbreaking inventions over the years, such as the pocket calculator, one of many market-making technologies that propelled the company to a current market value of $58 billion. But unlike many upstarts that quickly shot to the moon in this valley, HewlettPackard seems to have an old soul.

To H-P veterans, the core of its success has been innovation. When the company made the leap a half century ago from a simple measurement company to a global computer behemoth, being at the forefront of innovation became the company's full-fledged pursuit. And to achieve its goals, H-P built a lab in 1966 that now provides 90 percent of the products that go into development.

Mark Smith, a smooth-talking 47-year-old University of Utah bioengineering Ph.D., and his team of researchers are tackling a problem that vexes everyone from CEOs to clerks. Passwords, entry codes, and other recognition techniques delay instant access to a computer, and the steps to get started can be time-consuming, let alone inefficient and annoying. Why can't a computer just recognize who you are and let you get to work?

By experimenting with recognition techniques, Smith and his team hope to enable any device, be it a computer, cell phone, or even doorway, to know who you are, where you are, and what's going on around you -a kind of continuous recognition-without having you do anything. …