Wednesday, December 3, 2008

U.S. losing its ability to innovate on tech hardware

U.S. consumer electronics and computer companies have profited from outsourcing manufacturing to low-cost producers in Asia. But the gains are temporary and U.S. companies have become less competitive in the long run, according to a new book by Richard Elkus, a Silicon Valley insider.
The book, “Winner Take All: How Competitiveness Shapes The Fate Of Nations,” chronicles the decisions that led U.S. firms to abandon the manufacturing of TVs and other electronics devices.
Elkus introduced the first consumer video cassette recorder to the public in 1970 as an executive with Ampex. But the company didn’t have the money to produce the VCR itself so it looked for partners.
The CEO of Ampex opted not to partner with Magnavox or Motorola, in part because he didn’t want a potential competitor on U.S. soil. Instead, he partnered with Toshiba, Elkus recounts in the book.
Japan rode the VCR to world dominance in television, displays, image processing and nearly all consumer electronics, he says.
In an article in Investor’s Business Daily, I take a look at whether we’re starting to see Asian firms, namely in Japan, Taiwan and China, take command of design and product innovation in addition to manufacturing.

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