Is San Diego User Friendly? High-Tech Giants Saying No : Cities Compete for Lucrative Research Bases
Fifty-seven cities in 27 states wanted it--and fought tooth-and-nail in a yearlong multimillion-dollar bidding war to get it.
Finally, in May, 1983, Austin, Tex., was named the lucky winner of the Microelectronics & Computer Technology Corp., or MCC, as it became known by its suitors. The Texas capital’s generous offer of free land, buildings, a large university endowment and other perquisites propelled Austin to victory over San Diego and two other finalists, ending the nation’s first major consortium competition.
Then came SPC--the Software Productivity Consortium. A joint venture of the nation’s top defense contractors, SPC sparked a similar battle among emerging high-tech centers fighting to be chosen as its home. San Diego was again a finalist, and again lost--this time to Fairfax County in Virginia, which, with its proximity to the nation’s capital, apparently wielded insurmountable political clout in the competition that ended last month.
So what’s all the fuss about? Why are economic development officials across the country investing months of their time to woo these consortia and, in the case of Austin, offering everything plus the kitchen sink to win them?
The answer’s not yet in, because these are new and untested phenomena. But opinions on the relative worth of a consortium to a city attempting to ascend into the high-tech spotlight abound--and vary widely.
“We are going to be one of the major technology centers in the country in software, and thus will serve as a drawing magnet for all types of related industries,” Frank Druding, chairman of SPC’s site selection committee, said. “The prediction is that an area that hosts us will receive an aura of being a serious, high-quality center of technology--a good place to perform contracts and fund research, for example. The entire region will benefit from the reflected glow.”
In addition to bestowing prestige upon a city, a consortium is invaluable as “a wellspring of innovation,” said Ted Lyman, co-director of the Public Policy Center at SRI International, a Palo Alto, Calif., think tank.
“MCC will be vitally important to Austin, because over the course of its life it will be throwing off ideas and people who will start up their own companies,” said Lyman, who recently completed an economic study of the Texas city. “If the conditions are set and the business climate is right, a consortium like MCC can promote tremendous growth.”
An MCC or SPC can also bring jobs to a community, and its researchers are regarded as an important resource for local universities, which often employ them as professors or visiting lecturers, Druding said.
“There’s a ripple effect that enriches the local economy,” he said.
But some high-tech leaders disagree completely.
“Those things are pure malarkey, baloney, a joke, and San Diego should not be the least bit worried about losing them,” said Walter Lowenstern, one of four engineers who founded Rolm Corp., a Silicon Valley-based maker of telecommunications systems and military computers, in 1969. “Personally, I think these consortiums are going to fail, because at some point in time, one or more of those companies is going to get tired of funding it.”
Lowenstern predicted that unless consortia “have their own independent source of income, their own royalties, they’re going to die. Because every company is going to feel like it’s not getting its fair share of whatever benefits are reaped from the research, if there are any.”
Rep. Ed Zschau (R-Los Altos), agrees--up to a point.
“Frankly, I think they’re overrated,” said Zschau, who represents a large chunk of Silicon Valley and started his own high-tech company. “I’d much rather have a string of small companies starting up and growing and then producing spinoffs. Going all-out for a consortium is much like putting all your eggs in one basket.”
Sure, “it would have been better if (MCC chief) Bobby Inman had chosen San Diego rather than Austin,” Zschau said. “But it’s not a make-or-break proposition.”
The general goal of consortia like MCC and SPC is to achieve improved results by pooling scientific talent and sharing the cost of research, Druding said. With SPC, for example, each of the consortium’s 13 companies is expected to contribute $1 million annually, a sum that theoretically buys the firm access to $13-million worth of research.
Each company has a member on the executive board, which is the consortium’s governing body and will meet regularly to provide ongoing direction.
“Getting together is critical because not one of us alone could organize a critical mass of talented specialists and carry the (financial) burden of their work,” Druding said. “Also, as a group we will collectively have a better sense of where the country’s research should go than we do as individual companies.”
MCC is pooling resources to compete with Japan’s growing high-tech might.
The consortium has four basic goals: the development of artificial intelligence; the development of computers that write their own programs; the use of computers in designing and manufacturing goods, and the development of alternative production techniques.
MCC and other consortia were initially beset by questions of antitrust violations, with critics charging that companies were joining forces to suppress competition in the high-tech market. But recent rulings by the Justice Department appear to have quelled such concerns.
