Convergence and unbundling of corporate R&D in telecommunications: is software taking the helm?

P. M. Rao

Telecommunications Policy, 1999, vol. 23, issue 1, 83-93

Abstract: This paper presents a view of the changing structure of corporate R&D in telecommunications - one that is close to Adam Smith's insightful and enduring idea of division of labor - that perhaps we are witnessing the beginnings of vertical disintegration and unbundling of important segments of the industry's R&D activity. The paper maintains that the emergence of an independent software industry - aided by the convergence of computer, telecommunications and imaging technologies - and the rapid growth of technology-based alliances are at the heart of this trend. So extensive is the vertical disintegration of R&D that, in 1997, the top 10 independent software vendors in the US spent more on R&D than the combined spending by AT&T and Lucent whose sales were well over three times as large. It appears that the source of future innovation in the telecommunications industry lies not in its services segment but rather in telecommunications and Internet equipment firms and independent software firms. Increasingly, the fortunes of large service providers like AT&T will depend less on innovation and more on their ability to configure and market complete one-stop-shopping solutions to customers by combining internal resources with outsourced technologies, products and services.

Keywords: R&D; Telecommunication; Software; Innovation (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (7)

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