Economics of Technology – Page 54

Obama Delays Biotech Innovation

Source of graph: scanned from the print version of the WSJ article quoted and cited below.

(p. A8) The crop-biotechnology industry, growing frustrated as it watches the approval time for new seeds almost double under the Obama administration, is pressuring Washington to clear inventions more quickly.

The logjam at the U.S. Department of Agriculture, which must clear genetically modified seeds, is slowing the launch of products that could give farmers more alternatives to seeds from crop biotech giant Monsanto Co.
Also, some biotech-industry executives worry the delays signal that the Obama administration, which has painted itself as pro-biotech, is gearing up for a far tougher analysis of the potential environmental impact of these crops, which could make it harder for inventions to reach the marketplace.
On average, a genetically modified seed takes 1,188 days to pass federal scrutiny, almost twice as long as in 2008, the last year of the Bush administration, according to the Biotechnology Industry Organization, a Washington, D.C., trade group.
“There is concern we might see other countries move ahead of the U.S.,” said Sharon Bomer Lauritsen, executive vice president of food and agriculture at BIO, who added that the delays “might stifle investment in what has been a very dynamic part of the U.S. economy.” BIO’s members include hundreds of companies such as DuPont Co., Syngenta AG and Monsanto, as well as academic institutions.

For the full story, see:
SCOTT KILMAN. “Biotech Firms Seek Speedier Reviews of Seeds; Approval Time for Genetically Modified Crops Doubles under Obama as Some Fear Tougher Stance; Feds Blame Logjam.” The Wall Street Journal (Weds., April 28, 2010): A8.

Electronics Projects Were Wozniak’s “Passion” and “Pastime” and “Reward”

(p. 127) I think most people with day jobs like to do something totally different when they get home. Some people like to come home and watch TV. But my thing was electronics projects. It was my passion and it was my pastime.

Working on projects was something I did on my own time to reward myself, even though I wasn’t getting rewarded on the outside, with money or other visible signs of success.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

Companies Make Big Bets to Get Us What We Need

“The Molycorp Minerals rare earth mine in Mountain Pass, Calif.” Source of caption and photo: online version of the NYT article quoted and cited below.

If the government does not interfere with the price system, then the prospect of higher prices will provide private companies and entrepreneurs the incentive to take risks to provide us with what we need. In the article quoted below, the example is rare earth minerals that are used in high technology products.

(p. B1) On a high plateau where burros and jackrabbits wander an hour’s drive southwest of Las Vegas, a 400-foot-deep chasm hewn from volcanic rock sits at the center of an international policy debate.

The chasm, in Mountain Pass, Calif., used to be the world’s main mine for rare earth elements — minerals crucial to military hardware and the latest wind turbines and hybrid gasoline-electric cars. Molycorp Minerals, which owns the mine, announced on Monday that it had registered with the Securities and Exchange Commission for an initial public offering to help raise the nearly $500 million needed to reopen and expand the mine.
Molycorp is making a big bet that its mine — once the world leader in production of rare earth elements, but now a rusting relic — can be made competitive again. Global demand is surging for the minerals. And customers, particularly the American military, are seeking alternatives to China, which now mines 97 percent of the world’s rare earth elements.
As part of reopening the mine, Molycorp plans to increase its capacity to mine and refine neodymium for rare earth magnets, which are extremely lightweight and are used in many high-tech applications. It will also resume bulk production of lower-value rare earth elements like cerium, used in industrial processes like polishing glass and water filtration.

For the full story, see:
KEITH BRADSHER. “A Mine Owner’s Risky Bet on Rare Minerals.” The New York Times (Thur., April 22, 2010): B1 & B4.
(Note: italics in original; ellipses added.)
(Note: the online version of the review is dated April 21, 2010 and has the title “Challenging China in Rare Earth Mining.”)

Cheap New Technology for the Masses Is Financed by First Adopters’ High Priced Buys

“Buying on Day 1: Sayuri Watanabe came from Japan to be among the first to get an iPad last month at the Apple store in downtown San Francisco.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) WHY would anyone rush to buy a product knowing full well that it would be cheaper — and probably better — in a matter of months?

Hundreds of thousands of iPad buyers did just that last month. Steven P. Jobs, Apple’s chief executive, crowed that in the first 28 days on the market, Apple sold one million iPads. He found it remarkable that buyers snatched up this new slate computer at twice the fervid pace of the first iPhone.
But what is truly remarkable about this surge in consumption is that early adopters — those who simply have to own a new gadget right away — cheerfully exhibited what might seem to be irrational behavior. These ardent consumers will stand in long lines, if that’s what it takes, to get an overpriced gadget ahead of everyone else they know.
A tough lesson about buying early could have been learned by the iPhone’s first buyers back in 2007. Those early adopters paid $600 for a phone. Two months later, Apple dropped the price to $400. Then, in June 2009, it introduced a better version, with twice the storage, for $200, one-third the original’s price.
. . .
Dan Ariely, a professor of behavioral economics at Duke University and the author of a new book, “The Upside of Irrationality,” has studied why earlier adopters do what they do. “It’s not about the cost-benefit analysis,” he says. And rarely is it a successful calculation of higher productivity, though many a person has tried to justify purchases of expensive toys that way.
It can be more about cementing one’s identity. Although people who want to be first with a product aren’t making a direct calculation — “I’d pay $100 for my ego” — they may derive value from showing off a new product or being perceived as being at technology’s forefront.
“I realized years ago that I derive great pleasure from buying a new gadget,” said Professor Ariely. “I bought a Segway.”
And public awareness may matter. Professor Ariely says the behavior is akin to how we can be more willing to do something good if the public knows about it.
. . .
But even if you would never be the first in your neighborhood to buy a gadget, don’t scorn the early adopters. They are working for you. “They, in a sense, provide valuable services to other consumers by their willingness to serve as a guinea pig,” said Jay Pil Choi, a professor of economics at Michigan State University, who wrote a much-quoted paper on herd behavior and the “penguin effect.”
. . .
HE described early adopters as pioneers. “If all consumers are striving for value and take the approach of ‘wait and see,'” he said, “the new products will never be able to take off or take much longer to succeed in the marketplace.”
He added, “Their early purchase allows the firms to go down the learning curve and enables a lower price for other consumers.”

For the full commentary, see:
DAMON DARLIN. “Everybody’s Business; Applause, Please, for Early Adopters.” The New York Times, SundayBusiness Section (Sun., MAY 9, 2010): 6.
(Note: ellipses added.)
(Note: the online version of the article is dated May 7, 2010.)

Huge Greenhouses Dependably Yield a Variety of Ripe Tomatoes Even in Winter

“Some of the more than 500,000 plants at Backyard Farms at its Maine greenhouse.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D1) AN icy mixture of rain and sleet fell on the glass roof of Greenhouse Two at Backyard Farms here, but as its big blue door slid open and the warm, green, celery smell of tomato plants wafted out, it was summer.

When it was built three years ago, the company’s first 24-acre greenhouse in Madison was already the largest building in Maine. This second connected greenhouse, completed last year, brought the total area under glass to some 42 acres, or roughly the size of 32 football fields. Even in the depths of winter, a million tomatoes ripen indoors to harvest each week, snipped from their vines by workers in T-shirts and shorts.
. . .
Once, if you wanted tomatoes out of season, you mainly had to settle for hard pink ones picked green in the fields of Florida or Mexico and shipped by truck. Commercial greenhouses could do better, but they were a niche market.
Backed by consumer demand for fresh tomatoes year round, the indoor acreage devoted to growing tomatoes has become nearly six times as large since the early 1990s, said Roberta Cook, a marketing economist who helped write what many in the industry consider to be the definitive report on greenhouse tomatoes in 2005.
Those tough pink ones are still good and cheap enough for most fast food restaurants and the food service industry, which buy about half the fresh tomatoes sold in the United States. But with shoppers willing to pay a pre-(p. D5)mium — even $4 to $5 a pound — for red vine-ripened ones with more flavor, greenhouse tomatoes now represent more than half of every dollar spent on fresh tomatoes in American supermarkets, according to figures from the Perishables Group, a market research firm in Chicago.
. . .
Advances in genetics have allowed breeders to cross-pollinate precisely for control over specific attributes like size, color, disease resistance, firmness for shipping and levels of acids and sugars, the balance of which accounts for the bulk of a tomato’s flavor. Too little sugar turns fruit tart. Too little acid turns it bland. Too little of both leaves tomatoes with little flavor.
As tomatoes ripen on the vine they develop more of those sugars and acids and other flavor elements. But most of the major farms growing tomatoes that are sold fresh year round are in areas where the climate is more hospitable to varieties best picked green.
By creating their own climate — whether in Arizona, Maine or Canada — greenhouses allow growers to pick and ship tomatoes only when they’re ripe.

For the full story, see:
CHRIS LADD. “Endless Summer, Even in Maine.” The New York Times (Weds., March 31, 2010): D1 & D5.
(Note: ellipses added.)
(Note: the online version of the article is dated March 30, 2010, and has the title “Giant Greenhouses Mean Flavorful Tomatoes All Year.”)

“Even as snow falls outside, workers harvest tomatoes year-round at Backyard Farms in Madison, Maine. About 200 of them tend a half-million plants under 42 acres of glass, roughly the same amount of floorspace as in the Chrysler Building.” Source of caption and photo: online version of the NYT article quoted and cited above.

“Coase’s Penguin” and the Motives for “Commons-Based Peer Production”

(p. 108) Noted Yale law professor Yochai Benkler has a theory. In a widely circulated and famous essay on the Internet called “Coase’s Penguin,” he offered his thinking on why people participate in efforts such as Linux and other “free” projects. There was already a culture, before Wikipedia, of folks donating their time, effort, and skills to the collective good for no monetary gain or immediate compensation. Benkler observed this part of the hacker ethos and was curious to know what the common thread was.

He dubbed it “commons-based peer production.” It’s a fancy moniker for the phenomenon of people working together toward the same end–creating computer code or content that is free to be copied, distributed, used, and modified by others.
Benkler believes the Internet and the “free culture” movement have allowed individuals to connect and combine their efforts in ways unprecedented in history. The legal academic is not shy to combine scholarship outside his area of training by drawing on economics, sociology, and technology to form his theory.
According to Benkler, if monetary rewards and the creation of corporate firms have been the accepted driving force for human innovation and progress, there has to be something else driving volunteers in Linux, Wikipedia, and other “free” projects that have become so pervasive and monumental in the digital age.
He asserts the motivation comes from two main things other than money: the “socio-psychological” reward of interacting with others, and the “hedonic” personal gratification of the task.
Wikipedia’s magic occurs when these two things come together. One person’s personal affection and indulgence—mapmaking, grammar checking, baseball statistics, history of stamps—easily finds a home in Wikipedia’s amalgam of topics, where it also feeds into and inspires activities by others.

Source:
Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World’s Greatest Encyclopedia. New York: Hyperion, 2009.

“Real Innovation in Technology Involves a Leap Ahead”

“GAME CHANGER? After months of anticipation, Apple unveiled its iPad tablet computer last week.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) The more, the better. That’s the fashionable recipe for nurturing new ideas these days. It emphasizes a kind of Internet-era egalitarianism that celebrates the “wisdom of the crowd” and “open innovation.” Assemble all the contributions in the digital suggestion box, we’re told in books and academic research, and the result will be collective intelligence.

Yet Apple, a creativity factory meticulously built by Steven P. Jobs since he returned to the company in 1997, suggests another innovation formula — one more elitist and individual.
This approach is reflected in the company’s latest potentially game-changing gadget, the iPad tablet, unveiled last week. It may succeed or stumble but it clearly carries the taste and perspective of Mr. Jobs and seems stamped by the company’s earlier marketing motto: Think Different.
. . .
(p. 6) Great products, according to Mr. Jobs, are triumphs of “taste.” And taste, he explains, is a byproduct of study, observation and being steeped in the culture of the past and present, of “trying to expose yourself to the best things humans have done and then bring those things into what you are doing.”
His is not a product-design philosophy steered by committee or determined by market research. The Jobs formula, say colleagues, relies heavily on tenacity, patience, belief and instinct. He gets deeply involved in hardware and software design choices, which await his personal nod or veto. Mr. Jobs, of course, is one member of a large team at Apple, even if he is the leader. Indeed, he has often described his role as a team leader. In choosing key members of his team, he looks for the multiplier factor of excellence. Truly outstanding designers, engineers and managers, he says, are not just 10 percent, 20 percent or 30 percent better than merely very good ones, but 10 times better. Their contributions, he adds, are the raw material of “aha” products, which make users rethink their notions of, say, a music player or cellphone.
“Real innovation in technology involves a leap ahead, anticipating needs that no one really knew they had and then delivering capabilities that redefine product categories,” said David B. Yoffie, a professor at the Harvard Business School. “That’s what Steve Jobs has done.”

For the full commentary, see:
STEVE LOHR. “The Apple in His Eye.” The New York Times, Week in Review Section (Sun., MARCH 4, 2010): 1 & 6.
(Note: ellipsis added.)
(Note: the online version of the article is dated January 29, 2010 and had the title “Steve Jobs and the Economics of Elitism.”)

An “Entrepreneur’s Visa” to Let the Future Sergey Brin In

(p. A19) . . . , there is one way to create a lot more jobs without spending federal money. Let’s import them. More precisely, let’s import the people who create them: entrepreneurs.

A bipartisan bill that would begin to do just that was introduced on Feb. 24 by Sens. John Kerry (D., Mass.) and Richard Lugar (R., Ind.). Their “Startup Visa Act” would create a new, two-year visa for immigrant entrepreneurs whose firms attract at least $250,000 in financing from American angel investors or venture capital firms.
. . .
Here’s a way to improve on the Kerry-Lugar plan. Create a true “job creator’s visa,” one tied directly and only to job creation by new immigrant entrepreneurs. The visa could be a temporary one for immigrants already here on another visa who establish a business. It could then be extended if the firm hires at least one American non-family resident. The visa should become permanent once the enterprise crosses a certain job threshold (such as five or 10 workers). But it would not be tied to financing.
. . .
Google was founded by Sergey Brin, a Russian immigrant, and American Larry Page by borrowing funds from their own credit cards. Why on earth would we want to create an entrepreneurs’ visa that couldn’t let in the future Sergey Brin?

For the full commentary, see:
ROBERT E. LITAN. “Visas for the Next Sergey Brin; To create more jobs, let’s import more employers.” The Wall Street Journal (Mon., MARCH 8, 2010): A19.
(Note: ellipses added.)
(Note: the online version of the article is dated MARCH 7, 2010.)

At Odds with Academic Culture, Wiki Programmer Adams Released Early and Released Often

(p. 67) Adams did something unexpected for the academic community, but common in open source culture–release early and release often. Within weeks of its launch, one of the biggest annoyances of Wikipedia was resolved directly by the software’s author. It was not because of monetary compensation or any formal request, but simply because the author was interested in solving it on his own time, and sharing it with others. It was the hacker ethos, and it had crossed from the domain of tech programmers into the world of encyclopedias.

Source:
Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World’s Greatest Encyclopedia. New York: Hyperion, 2009.

The Ultimate Complement: When Your Competitor Uses Your Product

“. . . apparently a photo that was snapped from the iPhone as Ballmer brandished it above his head.” Source of caption and photo: http://www.gearfuse.com/ballmer-lashes-out-at-microsoft-employed-iphone-user-threatens-to-smash-iphone/

(p. A1) REDMOND, Wash.–Microsoft Corp. employees are passionate users of the latest tech toys. But there is one gadget love that many at the company dare not name: the iPhone.

The iPhone is made, of course, by Microsoft’s longtime rival, Apple Inc. The device’s success is a nagging reminder for Microsoft executives of how the company’s own efforts to compete in the mobile business have fallen short in recent years. What is especially painful is that many of Microsoft’s own employees are nuts for the device.
The perils of being an iPhone user at Microsoft were on display last September. At an all- company meeting in a Seattle sports stadium, one hapless employee used his iPhone to snap photos of Microsoft Chief Executive Steve Ballmer. Mr. Ballmer snatched the iPhone out of the employee’s hands, placed it on the ground and pretended to stomp on it in front of thousands of Microsoft workers, according to people present.
. . .
Nearly 10,000 iPhone users were accessing the Microsoft employee email system last year, say two people who heard the estimates from senior Microsoft executives. That figure equals about 10% of the company’s glo-(p. A10)bal work force.
Employees at Apple, in contrast, appear to be more devoted to the company’s own mobile phone. Several people who work at the company or deal regularly with employees there say they can’t recall seeing Apple workers with mobile phones other than the iPhone in recent memory.

For the full story, see:
NICK WINGFIELD. “Forbidden Fruit: Microsoft Workers Hide Their iPhones; Steve Ballmer Sours on Apple Product; Work for Ford, Drive a Ford.” The Wall Street Journal (Sat., MARCH 13, 2010): A1 & A10.
(Note: ellipses added.)
(Note: the online version of the article had the date MARCH 12, 2010.)