Creating the Computer

Book excerpt: The development of the first electronic digital computers in the 1940s signaled the beginning of a new and distinctive type of industry—an industry marked by competition through innovation, and by the large percentage of revenues spent on research and development. Written as a companion volume to Targeting the Computer: Government Support and International Competition, this comprehensive volume provides a new understanding to the complex forces that have shaped the computer industry during the past four decades. Kenneth Flamm identifies the origins of technologies important to the creation of computers and traces the roots of individual technologies to the specific research groups and programs responsible for major advances. He evaluates the impact of these innovations on industrial competition and argues that the emergence of specialization and product differentiation in the 1950s and the compatibility and standards in the mid-1960s were key factors defining this competition. Flamm also identifies the various market strategies adopted in later decades to challenge an industry leader, strategies linked to the entry and exit of individual firms. In addition to the effects of technology and internal industry developments, international competition and national policies on technology, trade, and investment shaped the evolution of this new industry. Flamm documents the role of government support for technology in the United States, Western Europe, and Japan and describes the critical technological and economic links between national and international markets. Finally, he links these strategies, technological trends, and national policies to one another and shows how they continue to influence current developments in the computer industry.