March 22, 2005 4:00 AM PST

Bright ideas, big wait on tech payback

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The tech industry is famous for billion-dollar ideas. But the rewards don't always to go to the inventor.

Some of the most important technologies of the past 50 years--the transistor, the relational database and the microprocessor--weren't the slam dunks for their creators that you might expect.

"If you don't get the model exactly right, capitalism can be unforgiving."
--Jerry Kaplan
Co-founder, Onsale

Some inventors lost their lead through a lack of insight. Corporate politics sometimes plays a role. More often, the delay of payback is simply the result of poor timing--a reasonable strategy at the wrong time. Take the microdrive at the heart of many of today's MP3 players, for instance. It was invented long before the world was ready for something like the iPod.

Still, those billions of dollars in research and development eventually paid off for at least some technology makers.

Here's some notable examples of inventions gone wrong and opportunities missed:

1. The transistor
In 1947, scientists at AT&T's Bell Labs created the world's first silicon transistor. Three of its scientists would later win the Nobel Prize in physics for the invention. Bell Labs obtained a patent for the device, but the invention was licensed to, among others, IBM, Texas Instruments and the forerunner of Sony. The goal was to avoid antitrust problems with the U.S. government. (In a 1956 consent decree, AT&T agreed to license the transistor freely.)

But relatively easy licensing terms cost AT&T millions in royalties.

"There are trillions of transistors in use," said Richard Belgard, a patent consultant.

On the bright side, the foundational patent would have expired in the mid-1960s, years before the computer revolution. By contrast, AT&T got to keep its phone monopoly until the mid-1980s.

AT&T had subsequent brushes with near-greatness, but these seem tougher to explain. It invented, but didn't become the dominant name in Unix. It passed on an opportunity to own cellular licenses in the '80s (although it got into cellular later). It also tried its hand at PCs.

2. Owning a bit of the Internet
Back in the early '90s, Robert Cailliau of the European Organization for Nuclear Research, or CERN, contacted venture capitalist Sven Lingjaerde to see whether the lab could get funding for its World Wide Web project.

At the time, Lingjaerde was at Swiss firm Genevest; now he's a co-founding partner at Vision Capital.

"When the project grew in size, more money was needed, and the top management of CERN then decided to cut the budget, claiming it was not directly linked to fundamental research and it was starting to cost too much," Lingjaerde said in an e-mail. "We were considering putting money behind the project, but only if a strong U.S. VC would join. We knew that our small means (would) not be enough. The business model was also not clear."

He tried to contact two well-known U.S. venture capitalists. The first never responded, despite several attempts. The second, whom Lingjaerde sent a five-

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1947 Transistor not SIlicon
The transistor that John Bardeen,
Walter Brattain, and William Shockley invented in 1947 was a germanium transistor, not a silicon one. Gordon Teal, of Texas Instruments, produced the first silicon transistor in 1954.

Nice article, though.

Posted by jim8253 (3 comments )
Reply Link Flag
What if we applied modern day IP strategy...
An interesting article (even if a little
inaccurate with the details), but it doesn't ask
the obvious question: how would the world be
different if the modern-day notions of
"intellectual property" and IP strategy existed?

I think that the obvious answer is that
innovation in highlighted fields would have
stalled and that costs involved in adopting the
technology would become a barrier to bringing
things to market. The advent of modern "IP" is
only now starting to substantially limit
technology development and increasing costs
Posted by Gleeplewinky (289 comments )
Reply Link Flag
IP and Washiungton Legislation
I totally agree, IP battles will limit innovation, and so will legislation pushed by gtroups battling the open web, open standards, and open innovation.

Legislation will also limit innovation--it already does witness the Digital Millennium Act, all in favor of content holdrs and granting almos teternal control, imho.
Posted by tomforemski (18 comments )
Link Flag
Bright Ideas
your selective choise of Ideas to use as reference material leaves a lot to be desired.

1)The Binary Code would have been better.
2)University of South Florida incarceration of a scientist for 15 years for "stealing his own notes", would have been better.

More idea's are lost to corruption than anything else.

Dennis Baker

Posted by dennisbaker2003 (6 comments )
Reply Link Flag

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