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September 29, 2006

Microsoft No. 4 in R&D spending; China gaining

Posted by Benjamin J. Romano at 10:58 AM

Battelle and R&D Magazine published a report on trends in research and development globally. The headline: CHINA GAINING GROUND IN GLOBAL 'HEAD AND BRAINS RACE'

China's investment in research and development as a percentage of its gross domestic product has grown from less than 1 percent in 1993 to more than 1.5 percent in 2005. Meanwhile, global leaders U.S. and Japan have remained relatively stable at around 2.5 and 3 percent, respectively. (Since 2000, however, the U.S. has been trending down and Japan has been trending up.)

The report is a manageable nine pages with lots of charts and tables. One lists the top 20 global companies by R&D spending. Microsoft is No. 4 behind Pfizer, Toyota and Ford. General Motors rounds out the top 5. (The remainder of the top 20 is populated by auto makers, big pharma and tech companies.)

Microsoft's high position is in part a function of the way the software industry accounts for building its products. Salaries of the thousands of engineers working on Windows Vista and Office 2007, for example, get chalked up as development expenses. The company has said the current wave of new products coming to market in the next several months represent some $20 billion in R&D investment over previous years. In fiscal 2006, Microsoft chalked up about $6.8 billion in R&D spending.

Earlier this week, Microsoft Research -- the group looking to push the state of the art in computer science -- celebrated its 15th anniversary. This cutting-edge research group represents only a fraction of the company's overall R&D spend.

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