Schwartz says that approximately half of EMC’s revenue comes from outside the United States of America (US) and when making purchase decisions, emerging countries are showing very clear preference for companies that have local research and development (R&D) and/or manufacturing facilities. ‘’So if you want to be a growth-oriented multinational technology company, you need to establish an R&D presence in these rapidly expanding markets. And it’s not always necessary to establish a centre of excellence (COE) or an R&D centre. Often funding a university research project or hiring a professor is enough to get started,’’ says Schwartz.
He says global R&D is essential for both innovation and revenue growth. ‘’The fact that Silicon Valley, Boston, New York, Seattle and a few other U.S. locations have so many more start-ups than other places around the world leads some people to think it is enough to depend only on what can be found in the U.S.
‘’How did Kaspersky Security get started? Those ubiquitous USB drives? How about the avatars you see when playing with an Xbox gaming console? Or the ARM chips that are found in more than 60% of the world’s mobile devices? None of these products was invented or developed in the U.S.,’’ says Schwartz.
He says in addition to product innovation, access to very talented people is another great reason to be developing products in locations inside emerging markets. ‘’The large number of patents filed from our international locations is a huge proof point here. Just think, the fastest growing product line in EMC’s entire history – the market leading all-flash storage array XtremIO – was originally conceived and developed outside the U.S., in Israel.
Schwartz says it is time to reset some misconceptions and directly address the reality of the situation. ‘’With more than half the growth in the IT market over the next 10 years predicted to come from emerging economies, R&D in these markets are essential for both innovation and revenue growth for growth-oriented multinational technology companies.’’