Site: David Sarnoff Research Center
Princeton, NJ 08543-5300
Date Visited: March 30, 1995
Report Author: S. Forrest and D. B. Keck
S. Forrest D. Keck
The current Sarnoff operation began in 1987. As part of its original divestiture from GE, it received a support payment of about $50 million/year for 5 years. Some of this was used to create a fund that now supports spin-off projects. Sarnoff's annual capital budget is about $9 million. The Research Center has about 750 people, 500 of whom hold graduate degrees. The budget is approximately $100 million/year. Sarnoff's activities are divided into three areas: Information Systems, Electronics Systems, and Solid State.
Sarnoff's three divisions operate with different visions but the same structure. They maintain 5 market specialists in each division to find new opportunities. The market specialist's job is to open doors, but the technical people sell the contracts. They measure their progress by how well they hit projected income.
Each division has about 150 people. The organization is hierarchical: a vice president has 3-6 lab directors; the directors have 3-6 group heads; each group includes 8-12 members. They have a disproportionate number of PhDs in the organization. These people are responsible for transferring technology into the pilot production line and making it work. The PhD scientists not only invent the device or system but are responsible for the product and/or process for the long term. This concept seems very similar to what the JTEC panel saw in Japan. A scientist or engineer moves with a project transfer and receives much credit for having done so. Further, while the Japanese companies tend to hire personnel with MS and BS degrees rather than PhDs, they nevertheless have PhD-capable people in their workforces. It is very likely that these are the people most likely to transfer a project, because of their intellectual capability. That is certainly the Sarnoff model. The Sarnoff growth rate is currently about 20% per year. Most of this is in the software and design areas. Dr. Ettenberg was not hiring in optoelectronics at the time of the JTEC visit.
Dr. Ettenberg sees Japan as behind in optoelectronics because of being relatively inflexible. Once Japanese companies begin moving in a given technology direction, it is difficult for them change this direction. This, argues Dr. Ettenberg, must work at the key component level; that is, not at the chip but at the microprocessor level or at the level of the software to run the chip. Sarnoff is increasingly doing software. Dr. Ettenberg estimates that 20% of the center's effort is in this area, and that percentage is growing.
Dr. Ettenberg picks his customers by knowing their business. Sarnoff has defined its core competency as "photons in to photons out." This is an extension of the former RCA competency in video technology. Over the past few years, Sarnoff has obtained government contracts to support the building of a competency in digital video.
Typically, Sarnoff researchers work in project teams. A team may consist of 6 PhDs plus support. It is able on most projects to produce "one-that-works" for a customer in 9-12 months. In an additional 12 months, it will be at the 100ö1000 unit pilot production level. The PhDs are expected to stay with a project until it is completed. Some projects develop into spin-off companies.
The research center presently has four spin-offs running: Sarnoff Real Time Corporation (building video servers); SARIF (doing LCD projection displays); Sensar (making video boards); and Secure Products (phosphor tagging of U.S. currency). Sarnoff scientists are in many cases given equity positions in the start-ups, which keeps them motivated to remain with Sarnoff and working toward the next spin-off. The vision is to create $1 billion in spin-offs by the year 2000.
The Sarnoff transition was successfully achieved over the past 8 years from a captive laboratory of General Electric to a stand-alone pilot manufacturing laboratory. The company will build 1 to 10,000 units/year of devices, subsystems, and systems within its core competency area under contract to companies or government laboratories. Government contracts, however, merely keep the infrastructure going; the research center is unable to make sufficient money on these endeavors to fund the operations. For this, Sarnoff must obtain industrial development contracts.