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Innovation Mandate: Has America Lost Its Innovation Edge?

In an ongoing series of articles, opinion columns, and executive interviews, InformationWeek will explore the issues driving and holding back U.S. tech innovation. First up: What our extensive research tells us.

For the better part of a decade, executives, economists, policy makers, researchers, and other so-called experts have lamented the inexorable decline of the U.S. IT industry and the country's standing as the global technology leader. Reports with ominous titles have questioned whether U.S.-based IT vendors and the organizations they sell to have the technical chops, national backing, and requisite will to out-innovate their counterparts in other countries.

Economic pessimism is nothing new in the U.S. In his 1988 book Trading Places, Clyde V. Prestowitz Jr., a former U.S. trade negotiator, argued that Japan would overtake the U.S. as the world's preeminent industrial power, mostly because the country's mighty ministries were working hand-in-hand with its mighty keiretsu to dominate sector after strategic sector, including semiconductors. More recently, in "Rising Above The Gathering Storm," an influential report published in 2007, several leading U.S. executives, researchers, and academics warned that "the scientific and technological building blocks critical to our economic leadership are eroding at a time when many other nations are gathering strength."

It's not just the intelligentsia who see a decline in U.S. technology competitiveness. When asked in an InformationWeek Analytics survey to describe where the U.S. stands in the global IT industry, 63% of the 624 business technology professionals who responded characterized the U.S. as "a strong player, but losing its lead on a global scale," while 5% see the U.S. as "a former leader whose best days are behind it." Only 32% of survey respondents still see the U.S. IT industry as "a global leader, positioned to grow its influence."

While InformationWeek's editors can relate to the sense of national urgency, especially as the U.S. limps out of the worst recession in decades, we remain bullish. Most of the profound IT-based innovations of the past decade came from-and continue to come from-the U.S., not Asia or Europe.

U.S.-based companies are the global leaders in developing and mass marketing most emerging consumer and business information technologies, including social networking and myriad other Web applications; Web app marketplaces; e-readers and tablets; cloud computing; software as a service; server virtualization; and commercial open source. And U.S.-based vendors still lead in most of the mature IT sectors: microprocessors, PCs, databases, business intelligence, storage, content management, data center hardware and software, operating systems, networking, network and systems management, consulting and integration services, and outsourcing. The strategic area where our survey and interview subjects agree that U.S. tech companies are furthest behind those in other countries: public telecom.

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