Saturday, March 27, 2010

Baking donuts

It is still early in the morning, but the alarm clock goes off and turns on the radio.

"Today will be another gorgeous day in the Bay Area. Go out and enjoy it, because tomorrow will be cloudy."

As I imagine my wife's arm making a big arc to shake me, her voice exclaims "get up, I have painting class at the Art Center at ten and we have to be back from the farmer's market before then!"

"The sun is not yet out. Five more minutes. You take the shower first."

"Chan-ken-pon"

Meanwhile on National Public Radio a commentator notes that "when we went to the moon the Government was spending 5% of the budget on NASA, today the administration is spending only 0.5% and soon we will have to rely on China or India to put our satellites in orbit."

In and out the arms of hypnos, I ask myself what is new. It is just a different stage in a world's life. A baker comes to my mind.

The baker wants to bake donuts. He spends a long time developing the best recipe by trial and error. Then he has to get used to baking with an industrial oven. Finally, he has to line up all his suppliers. All his resources go into developing the best technology for baking donuts.

But after that he can just hire donut technicians and let them do the work. Then he can use dead time in an industrial bakery to have his donuts baked, so he does not have to worry about employees. Finally, he can outsource his donuts to Shanghai, and kick back with a maitai in Maui.

How much a baker spends on developing his donut technology just depends on where he is in his business life cycle. You can compare baker's stage in life by looking at how much they spend on development.

This reminds me of an email Irwin Sobel sent around a few weeks ago. You just go to Wolfram|Alpha, enter the ticker symbols of your favorite local companies and you get their revenue. Then for each you enter "<ticker symbol> | research and development expense" to get their R&D budget. Here is Irwin's table:

Company
R&D [G$]
Revenue [G$]
R&D/revenue [%]
Cadence
0.373
0.860
43.434
nVIDIA
0.9044
2.825
32.014
AMD
1.721
5.403
31.857
Adobe
0.655
2.946
22.237
Yahoo!
1.182
6.535
18.087
McAfee
0.307
1.826
16.829
Intel
5.653
35.130
16.092
Symantec
0.876
5.922
14.789
Microsoft
8.581
58.690
14.621
Agilent
0.642
4.481
14.327
Google
2.843
23.650
12.021
Oracle
2.775
23.230
11.946
EMC
1.644
13.940
11.793
Cisco
4.994
51.430
9.710
Seagate
0.895
10.019
8.913
IXYS
0.0186
0.225
8.261
IBM
5.820
95.760
6.078
Xerox
0.827
15.330
5.395
Kodak
0.361
7.606
4.746
Apple
1.416
42.050
3.367
NCR
0.142
4.688
3.029
HP
2.819
114.600
2.460
Unisys
0.102
4.998
2.216
Dell
0.621
51.430
1.207

"Hayaku! Get up!"

"Chan-ken-pon"