Intel spends more money on research and development than the Australian government, something that needs to be addressed if Australia is to sustain success in the IT industry, according to Intel CEO Craig Barrett.
In a keynote address held in Sydney yesterday, Barrett said Australia puts less than 1 per cent of its gross domestic product back into R&D. While Australia allocates around $3 billion to the sector, Intel alone spends $4 billion.
"My company outspends your country substantially in this area," he told the audience. "And my revenue base is not as high as your gross domestic product base so I don't think you are doing enough here."
Barrett conceded that the issue was more of a national debate for the citizens of Australia than a visiting US executive, but he believes R&D is a major factor for developed countries' IT success on a global scale.
"Australia has the education, the workforce capability and the access to Asia in terms of ease of entry and opportunity," he said. "There are lots of strengths to switch onto and the global opportunities are very substantial."
Those opportunities range from vertical application software and rich content for broadband to healthcare information systems and communication systems, he said.
Broadband penetration also remains an issue. In a recent report by the Economist Intelligence Unit and Pyramid Research on e-readiness, Australia slipped from the number two position worldwide in 2001 to number six in 2002, largely because of a lack of broadband capability.
"From an infrastructure standpoint, it is probably one of the biggest challenges right now," Barrett said.
Along with broadband and R&D, Australia is well placed to take advantage of wireless technologies and e-business infrastructure, particularly as the market emerges from its current "period of turbulence".
"Economies will be driven by the value-add of service-based industries and a knowledge-based economy," he told the audience. "I am more optimistic about the industry than I have ever been."
Adding value in a service-level environment will be Australia's strength, he said. Not, despite ongoing speculation, manufacturing. "I don't look at Australia as a particularly good place to put a manufacturing plant," Barrett said. "I think it has a lot to offer in terms of engineering and service-level capabilities, but the labour rates in emerging countries make it difficult to put plants in any other place than in emerging economies."