Considering the number of innovative, pioneering corporations that have fallen by the way side or disappeared in the rapidly evolving technology sector–names like Digital Equipment Company, Netscape Communications, and Sun Microsystems–one comes face to face with the fundamental question regarding the means by which the marketplace values innovation; or, perhaps, how the marketplace often fails to value innovation.
Silicon Graphics was a multibillion dollar corporation at its peak. It revolutionized the rendering of graphics by computers. It pioneered the application of massive parallel processing in server farms to establish computer animation as a means of “shooting” motion picture. Yet, like DEC, it has been bought for a pittance. The mighty Goliath of graphical processing was gobbled up for a measly $20 million. Just as DEC was carved up piece by piece before being purchased outright by Compaq in 1998, SGI has met its final demise in Rackable Systems.
Will SGI meet a better fate than DEC? Many of DEC’s technologies are still alive in many other products, even though Compaq itself ceased to exist after failing to capitalize on any of DEC’s remarkable technological expertise.
So, does the marketplace reward innovation? Pioneering companies like Netscape, Sun, SGI, DEC and many others are all dead after succumbing primarily to the Wintel (Windows + Intel) monopoly and secondarily to the Linux and the free software revolution. Even Apple’s recent success has come on the heels of its total abandonment of proprietary hardware in favor of the Wintel monopoly. (I run Windows on my Mac via Parallels.) Although conformity to standards is crucial to delivering value to the consumer, there doesn’t seem to be much evidence that the standards arise or evolve from innovation. The companies that innovate seem to be getting slammed in the marketplace by the bullies with the marketshare and the advertising dollars.
What incentive is there, then, to innovate? If the ultimate outcome is either selling out to a (hopefully) high bidder as an alternative to getting absolutely clobbered by the same bidder, what incentive is there for the someone to start the next SGI or the next Netscape or the next Sun Microsystems? If the only hope for survival is to become huge as Google did in a matter of a few years, then we can be assured of a marketplace devoid of innovation for some time to come because no specter of such a colossus is visible anywhere on the horizon.
The only certainty is that the creative atmosphere that allowed so many giants like SGI, Apple, DEC, 3Com, Netscape, Commodore, and countless others to arise out of pure inspiration is gone. The evaporation of the environment that nurtured creativity and innovation has far reaching consequences for the economy, of course. Its short term manifestation is the death of Venture Capital.