The fact is that many organizations, including, we expect, existing IBM customers, are moving to or planning to do business in China. The new Shanghai lab and its parent facility in Beijing will provide the basis of future IBM business dealings and opportunities for decades to come.
In addition, we believe the new lab illuminates how IBM pursues its longer-term research and development strategy. In 2007, IBM spent $6.2 billion on R&D, a notable sum by any measure. But while most IT vendors spend the lion's share of their R&D budgets on applied research (i.e., improving or creating commercial products), IBM dedicates a substantial portion of its R&D on innovative exploratory research. The results of such efforts are typically less predictable, but the potential destination is often well worth the cost of the trip.
IBM's SSME is an interesting example of one such project. When the company began services research six years ago, the organization had 50 employees dedicated to better understanding the needs of IBM customers. Today, nearly 500 service science professionals are working at IBM's global research facilities. Their efforts underlie or help inform many of the offerings from the company's Global Services organization, which drives well over half of IBM's annual revenues. In addition, IBM is working to establish service science disciplines at over 200 universities, a number that the new Shanghai programs will help to grow.
The value of IBM's R&D strategy ranges from the common to the profound. Applied and exploratory research helped drive a wide range of company products and solutions. In addition, IBM led the IFI Claims list of top patent earning companies for 15 years running (with 3,125 patents earned in 2007). That's a nice feather in any cap, but the company also generates about $1 billion annually in intellectual property-related income. Overall, we expect the new Shanghai facility will add substantially to IBM Research's long legacy of creating innovative technologies and business services and solutions.
Charles King, President and Principal Analyst for research firm Pund-IT Inc. , focuses on business technology evolution and interpreting the effects these changes will have on vendors, their customers, and the greater IT marketplace. Since founding Pund-IT in December 2004, Charles has published the Pund-IT Weekly Review, which contains a variety of industry analysis features, including this blog.
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