I was reading an article in EE Times recently where the CEO of Linear Technology, Lothar Maier was commenting on the challenging times for the semiconductor industry. Maier predicted that “current market conditions will put significant pressure on small and emerging companies that have little innovation and rely on copying products that already exist in the market, as well as those that use price only to gain market share”.
I am sure that similar quotes from manufacturing executives have been delivered in every downturn. Net, net, clearly companies cannot survive the downturns without a long term view on investment and innovation.
To this end, I was extremely impressed by the decisions of two major high-tech manufacturers over the past month to make impressive “double down” investments in their long-term future viability.
First we read from AP of Intel’s decision to invest $7B to upgrade its US fabs to new process technologies over the next two years. Otellini "urged other companies to make similar investments, arguing from Intel's past experience that the proper response to a slump is to give customers new reasons to buy."
Second, Juniper Networks CEO, Kevin Johnson announced his company's decision this week to increase R&D spending, even at a time when many analysts were expecting cuts. I had the opportunity to work with Kevin during his time at Microsoft and was always impressed with his vision and long term customer focused view.
Without question these investments are extremely difficult decisions for every manufacturer. In my visits with our manufacturing customers over the past few months, I have seen great companies continuing to make investments in the future to emerge stronger. As I speak with these companies I encourage them to consider how Microsoft technology and solutions can help them double down for the long term. In many cases, this is helping them deploy products and capabilities they already own into new business processes.
Microsoft made our own announcement this week about our commitment to R&D through this downturn and for the long run. Speaking for the Manufacturing and Resources industry team at Microsoft, our commitment to you is to work to bring that R&D back out to manufacturers to help you reduce costs and innovate.
Over the months ahead I will be showcasing in this blog more unique example of Manufacturers and Microsoft innovating together through the economic downturn. As always, I welcome your contributions to this end.