IT in permanent decline, execs worry

SAN FRANCISCO - The U.S. IT industry may be in a state of permanent decline, a high-level Intel executive told an audience Thursday at Fall Intel Developer Forum.

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"In many regards, I think the restoration of the IT industry will not occur in the U.S. In fact, the U.S. IT industry may be flat to going down permanently," said Pat Gelsinger, senior vice president and chief technology officer of Intel's Corporate Technology Group, in Santa Clara, California. "Some of the things going on in government, policy and so on may be leading us right to the demise of the IT industry in the U.S."

For one thing, he said, strong educational fundamentals give foreign engineers an edge over many of their U.S. counterparts.

"Our education system has continued to deteriorate in that regard, which has further accentuated this weakness of the perception of the engineering industry," Gelsinger said. On the other hand, he praised the U.S. Federal Communications Commission (FCC) as a relatively progressive regulator, echoing comments he made earlier in the day.

Gelsinger's comments came during a panel discussion about innovation that brought together technology executives from Intel, IBM, Sun Microsystems, networking company Packet Design LLC and the FCC.

The conversation touched upon several globalization-related topics, including overseas research and development by U.S.-based companies, as well as rising competition from foreign vendors and the challenge of capturing growing foreign markets.

Packet Design Chief Executive Officer (CEO) Judy Estrin, a longtime IT industry executive now based in Palo Alto, California, who has served at Cisco Systems Inc. and 3Com Corp., said children in the U.S. need to be inspired to take up the banner of technology innovation.

"People talk to me a lot, worried that girls are not going into science and engineering. Yes! I worry also that the boys are not going into science and engineering," Estrin said.

Though the corporate leaders voiced worries about U.S. competitiveness, they embraced the idea of doing research and development outside the country.

Sun carries out development outside the country not to save money but to take advantage of foreign skills, Executive Vice President and Chief Technology Officer Greg Papadopoulos said.

"Talent is worldwide, and you go to where the talent is," he said. For example, Silicon Valley's culture fosters certain kinds of technology innovation but other regions stand out in other areas, such as consumer electronics product development.

IBM carries out research and development in more than 20 countries, said Robert Morris, director of IBM's Almaden Research Center, in San Jose, California.

"We're probably underinvesting, considering where the sales and the markets are," Morris said.

Taking advantage of better talent outside the U.S. poses a challenge to smaller technology companies because they may not have the money for multiple facilities and international travel, according to Estrin, who has founded several startups. There's no real substitute for face-to-face collaboration in solving some kinds of problems, Estrin said.

"I think the smaller companies can't afford to be as distributed, so you could maybe have development in two places. It's hard to be all over the place, and the small and medium companies won't do that as much," Estrin said.

In response to a question from the audience, some panelists praised Europe as a site for innovation. Gelsinger said Eastern Europe has been the source of many new ideas since the fall of the Iron Curtain. But Sun's Papadopoulos bemoaned some employment laws there that he said prevent a smooth flow of workers among companies.

"It's a real risk to hire people in a lot of parts of Europe, just from the burden that you put onto the company in doing so," Papadopoulos said.

Globalization creates some new criteria for those setting up business locations. One audience member, an American currently working for a small company in Switzerland, told the panel it's a great place to work because he has easy access to partners: Asia and North America each are only about a 12-hour flight away. The issue rang true for Papadopoulos.

"The physics of time zones, in fact, is hard ... we should all move to the North Pole or something," Papadopoulos said.