Deciphering High Tech’s Hype
A moneymaking matrix of innovation and investment, high technology encompasses a dizzying series of subsectors. Here, we aim to demystify this enigmatic industry while introducing some emerging markets and distinguishing the well-established hubs.
When attempting to decipher the meaning of “high technology,” one question bugs the brain, one distinction demands clarification: What makes something high-tech as opposed to low-tech? Across various industries and innumerable products, the answer is simple: time. Clichéd adjectives such as “cutting-edge,” “breakthrough,” and “avant-garde” are used casually to describe high-tech products as they slide off conveyor belts, clatter down assembly lines, and swirl around Petri dishes. But time is high technology’s archenemy, as these “cutting edge” products are made, inevitably, low-tech and obsolete in a matter of years or days, months or minutes. Therefore, something can only truly hold its high-tech title for the moment it’s released into a marketplace or scientific community; after all, a fresher, more advanced successor always is being researched. High-tech companies, however, can choose to locate in clusters to stay attuned to the latest developments and, in some less cutthroat cases, offer collaborations.
To compound this reality of late-breaking, up-to-the-minute developments, high technology essentially is an umbrella term that expands over a smattering of subsectors. Aerospace technology, biotechnology and pharmaceuticals, information technology (IT), electronic media and digital gaming, robotics, and advanced alternative energy are just a fistful of employment fields that often are considered high technology.
Across these, and other high-tech sectors, are locations around the United States that have fledgling, upstart knowledge communities. Other cities and states already are high-tech heavyweights that have powered the industry and reeled in to the present what, to many, seemed futuristic. Herein, we provide a sampling of both of these worlds—the emerging and the established—in addition to taking a quick glimpse into an international high-tech locale with an eye for digital domination. Business Facilities is excited to present our March cover story: a cheeky game of “Tick Tech Dough”—the clock keeps ticking, technology keeps advancing, and bucketfuls of big bucks keep overflowing. Let the games begin.
Technology’s Top Tier
High technology is one of America’s most competitive industries, with various states as self-proclaimed tech leaders. Most famous, perhaps, is Silicon Valley, a sliver of Northern California inundated several decades ago by silicon chip innovators and, later, populated by “dot-com” entrepreneurs who sparked the omnipresence of the World Wide Web. Downtown San Jose, CA often is considered the helm of Silicon Valley, but large swaths of the San Francisco Bay Area and extensions by venture capitalists and engineers into the Santa Clara Valley have kept Silicon Valley growing and relevant.
AeA (formerly the American Electronics Association) released its Cyberstates report in 2008; California topped the state rankings and Silicon Valley was dubbed the third- largest “cybercity,” or high-tech center, in the United States, preceded by the metro areas of New York City and Washington, D.C. The famed California tech titan offers the most robust high-tech salaries, averaging $144,800 per year, while also boasting the highest ratio of high-tech workers of any metro area—a staggering 286 out of every 1,000 private sector workers. Boasting such formidable numbers makes Silicon Valley the unrivaled headquarters haven for the high-tech industry’s most mammoth corporations, such as Apple, eBay, Google, Hewlett-Packard, Intel, and Yahoo!.
“Maintaining the Valley as the preeminent high-tech hub in the state, the country, and the world will depend on a number of variables,” says Deirdre Hanford, chairperson of the AeA board. “These include maximizing the skills of a diverse workforce, improving the quality of our education system, and investing in research and new technologies, such as green technology.”
In fact, California’s Silicon Valley faces formidable competition in another holiday hot spot, Florida. The Florida High Tech Corridor Council’s mission is to attract, retain and grow the high-tech industry and its workforce across a 23-county patch of the Sunshine State’s peninsula. The Tech Corridor partners with educational institutions such as the University of Central Florida, the University of Florida, and the University of South Florida to ensure a marriage of top-rate research and imaginative minds. Other collaborators include 20 local and regional economic development organizations, 14 community colleges, the president of the Florida Institute of Technology, and up to 24 representatives of the high technology industry.
Some targeted subsectors of the all-encompassing Florida Tech Corridor include agritechnology, aviation and aerospace, digital media and interactive entertainment, information technology, nanotechnology, optics and photonics, and sustainable energy. The Corridor is home to more than 3,700 IT companies alone, employing more than 33,000 people and generating a total payroll of more than $2 billion. Meanwhile, the thriving aviation and aerospace sector boasts more than 100 companies, employing nearly 20,000 people and a total payroll of $1.17 billion. The average annual salary for aerospace and aviation employees in the Corridor is more than $60,000, making the sector the Corridor’s second highest paying.
Massive in land mass and insightful in investment, Texas toasted 48 other states in AeA’s Cyberstates report, coming second only to California in total tech employment, outmaneuvering bronze-bound New York. In 2006, Texas’ high-tech payroll ballooned to $37.5 billion, with an average industry wage of $81,600.
Douglas J. Bartek, chairman of the AeA Texas Council, says, “With another solid year of growth under its belt, Texas’ tech industry continues to be on the upswing—much like the technology industry as a whole.”
To propel its front-runner status in the tech race, the state regularly utilizes the Texas Emerging Technology Fund (TETF), created by state legislature under the leadership of Governor Rick Perry in 2005 to support Texas’ activities in innovation and the commercialization of new technology. To date, the TETF has allocated more than $100 million to Texas companies and universities.
“In Texas, we understand that high-tech companies don’t just happen overnight, but are a product of forethought, sound vision and planning, and strategic investments by both the public and private sectors,” says Gov. Perry. “Through our Emerging Technology Fund, we are bringing the best scientists and researchers to Texas, attracting high-tech jobs and helping start-up companies get off the ground faster.”
In late February, Texas Secretary of State Phil Wilson announced the TETF would invest $150,000 in TXL Group, Inc., of El Paso. Up to $1 million in total investment may be available to the company if it meets certain performance benchmarks. The decision marks the first pre-seed funding awarded by the TETF and will assist TXL in its development of new technology to harvest roadway heat and convert it into energy. “As a state known for triple-digit summer temperatures and home to the most state highway miles in the country, this is an exciting project for Texas,” says Wilson. “The TXL Group has shown innovative leadership in addressing the future energy needs of our state and is a good example of a company turning challenges into opportunities through creative technology.”
The Microchip Megastate
While technology’s fearsome foursome of California, Florida, Texas and New York, in addition to Massachusetts’ major tech community, which continues to grow in and around Boston, AeA announced last year the need to reach beyond these traditional tech centers. “Legislation affects this industry in a lot of places you wouldn’t expect,” said AeA CEO Christopher Hansen.
Perhaps the last place the voluminous high-tech industry would think to consider is the smallest state, Rhode Island. But when dealing with microchips and nanotechnology, perhaps size doesn’t matter. Rhode Island actively is positioning itself as an emerging hub for high technology by touting Providence’s affordability and enviable location between New York City and Boston, as well as new tax incentives.
“This is central to our economic development strategy. We’re trying to create an innovation economy,” said Saul Kaplan, executive director of the Rhode Island Economic Development Corporation in February. “The whole state is 1,000 square miles with one million people in it and we all know each other; in an innovation economy, that’s a huge advantage. Connecting the dots across sectors and silos is what innovation is all about, and we have the perfect real- world test bed.”
In 2008, Rhode Island offered an innovation tax credit of up to $100,000 for high-tech companies and entrepreneurs. This new incentive complements the Slater Technology Fund, which awards $3 million in state grants annually. And in January, the Ocean State launched www.rinexus.com, a Web community that empowers techies to post job openings, share breaking news, and announce events such as computer science colloquia.
Biotechnology also leaped into Rhode Island’s forefront in January with the opening of the Center for Biotechnology and Life Sciences at the University of Rhode Island (URI). The 140,000-square-foot facility houses modern teaching laboratories, cutting-edge research laboratories, high-tech facilities for DNA sequencing and analysis, faculty offices, a 100-seat classroom, and a two-story, 300-seat auditorium, all to meet the needs of URI’s growing environmental biotechnology, life and health sciences programs.
“We are opening a new chapter in URI’s ongoing success story as a leading research institution,” says Governor Donald L. Carcieri. “This $54-million, state-of-the-art facility will not only advance scientific research in a host of important areas, but it will also serve as a hub for training, research and job creation in the life sciences. Without question, this high-tech center will contribute to our ongoing efforts to build an innovation economy.”
Illinois’ Figure 8
A Midwest maven, Illinois offers opportunities to conduct high-tech research and development at any one of the eight technology parks scattered throughout the state. The Chicago Technology Park (CTP) is a dynamic science and business community specifically designed to help support leadership in the life sciences. The CTP is located within the Illinois Medical District, the first and largest urban medical district in the United States, which houses more than 600,000 square feet of laboratory and office space. The CTP’s facilities, services, and 50 years of experience in business incubation help emerging science businesses flourish in fields such as biotechnology, medical devices, pharmaceutical production, genomics, bioinformatics, and nanotechnology.
Located in West Chicago, the DuPage National Technology Park (DNTP) is accessible to all of Chicago’s leading universities, top laboratories such as Argonne and Fermilab, and major Fortune 1000 companies in DuPage County. DNTP is designed to meet the needs of today’s premier technological companies. With a geographically redundant fiber communications network scalable to 100 GB per second, the 800-acre campus is engineered for ultimate bandwidth speed, redundancy, and survivability.
The Peoria NEXT Innovation Center is a $13-million technology incubator that fosters discovery, innovation, and commercialization for life sciences, engineering, and information technology. Within close propinquity of the National Center for Agricultural Utilization Research, Bradley University, Caterpillar, and the Biotechnology Research and Development Corporation, the Innovation Center works directly with Bradley University to coordinate funding and operations within the facility.
These three parks are fewer than half of the high-tech office and research spaces available in Illinois, making the state a preeminent cluster all its own. Factor in a slate of grants and incentives, such as the Illinois Innovation Challenge Grant Program, which provides grant writing assistance and matching funds to eligible Illinois technology-based entrepreneurs, innovators and new venture startups trying to acquire federal funds, and it is clear that Illinois has positioned itself as a major player in the high-tech huddle.
British Midlands: Digital Gaming Cluster
• The British Midlands, located just 90 miles north of London, is at the forefront of the UK’s digital games industry. The region has a long history in traditional gaming and has leveraged its advantage in traditional gaming technology to produce some of the top serious gaming applications in the world.
• The UK creative sector is growing twice as fast as the rest of the economy and contributes 8.2% of the GDP.
• The UK Government’s Technology Program has an annual £200 million budget to promote the UK’s international competitiveness by supporting collaborative R&D focusing on new and innovative sectors like serious gaming.
• The British Midlands is home to almost half of the UK’s digital game developers.
• There are over 160 game development companies based in the British Midlands, including globally known names such as PIXELearning, Blitz Games, Rebellion Derby, Free Radical Design, Circle Studio, Nu Generation Games, and Codemasters, Europe’s largest independent games publisher.
• 15,200 IT companies employ more than 92,000 in the Midlands.
• Costs are 25% less than those in London. (Ernst & Young)