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By Ed Sperling — Electronic News, 6/25/2004
Innovation and experimentation are beginning to explode in the electronics industry, in part driven by the upturn and the relative health of most companies in this market.

This should come as no surprise, but during the downturn the stated rule of thumb was that innovation increases when times are tough. Where real innovation did occur during the downturn was on the business side of the house, where the advance of technology suddenly collided with the ability to pay for it.

First and foremost, consortiums and partnerships are expanding at an unprecedented pace. There are several reasons for this. Technology simply has become too expensive to go it alone, and competition is rarely a threat in embryonic technology areas where markets have to be developed. It’s also far less risky to go after a new technology when you’re splitting the costs of development, which could run many millions of dollars. And the more resources thrown at a problem and the more different perspectives, the more innovative the final product can be. This is particularly true on a global scale, where entirely different perspectives of examining a problem can create unusual solutions.

Second, companies are now beginning to lead with business solutions to technology problems for their customers rather than technology solutions to business problems.

Finally, and perhaps more subtly, companies are looking at business models that defray the costs of development. That includes building chips from merchant intellectual property and defraying the up-front development cost by paying royalties after the fact.

Innovative technology will always drive profits, but innovative business strategies are about to become a far more integral part of those technology advances.