Converging Advances Boost Technology Industries

Article excerpt

With the United States seemingly mired in a cycle of steady but slow growth and hundreds of companies struggling to eke out even small profit increases, the technology industry is a standout.

And at the companies that make computers, software and high-tech drugs, rising demand and increasing exports suggest strong growth will continue, largely independent of the overall economy.

The information science industry is currently benefiting from a convergence of technological advances: * The release of Microsoft Corp.'s Windows NT, the operating system awaited by business customers. * Ever more powerful Pentium and Pentium Pro processors from Intel Corp. * The shift to intranets, which model internal computer networks on the technology of the global Internet. * Compelling new software applications that need all that power and connectivity. At the same time, the customer base has become far more global, while the United States has remained the dominant supplier. Even the poorest countries see a need to invest, while stronger economies in Asia and Latin America can help balance swings in demand at home. Medical technology moves at a different pace from information science; product development times and product life cycles are measured in years rather than months. Nevertheless, growth is still driven by product innovation, which continues at a rapid pace. A handful of biotechnology companies became profitable in 1996 as their first drugs gained regulatory approval, and this exclusive club could grow rapidly in 1997, with as many as 30 new drugs nearing the market. Innovative drugs and devices also drive double-digit growth at established companies like Pfizer Inc., Merck & Co. and Johnson & Johnson. These concerns in effect have become large biotech companies, working in partnership with researchers in smaller companies and academia. Since one new drug for a major disease can rapidly generate $1 billion or more in revenue, the growth potential here is enormous. "We really do have a profound change in our economic model, from a mass-produced, consumer-based economy to a global, technology-based economy," said Michael Murphy, publisher of the California Technology Stock Letter. Analysts say that if growth slows in 1997, there would inevitably be some reduction in capital outlays, but history shows that most companies continue to invest in new technology, because it is a strategic asset. Suppliers with hot new products can thus maintain growth even in a recession. "The deployment of information technology infrastructure is a solution to becoming more efficient," said Thomas A. Thornhill, director of technology research at Montgomery Securities. "Not doing it becomes a competitive issue; companies that fail to invest through the down cycle will emerge in a relatively weaker position on the other side." A new breed of corporate software applications that can help increase sales has proved especially compelling, according to Thornhill. These applications in turn have driven sales of larger computers as well as new operating system software and networking equipment. These programs, like a sales management application from Siebel Systems Inc. …

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