Half Mann, Half Computer

(Syndicated article for the Metro newspaper group).


Steve Mann in his lab at Toronto U 2001.


Steve Mann has been wearing his computer for decades. He even wore it on his wedding day, recording the ceremony literally from the groom’s point of view, with the help of a tiny, head-mounted camera. “I have created this machine…or kind of myself as a machine,” says the eccentric professor.

Professor Mann’s students at the engineering school at Toronto University call themselves “Photoborgs,” (derived from the “Borgs” of Star Trek fame whose computers were permanently implanted into their bodies.) But alas, Mann’s wearable computers are taken off sometimes - before showering or going to bed, for example. “It feels funny not having it on,” says aspiring Photoborg, and research student, James Fung,

Mann’s wearable computer is worn as a pair of glasses and is connected to a processor in the form of a “fanny pack” - or attached to an item of clothing. It takes commands by voice, or via a handheld input-device, and displays information either on tiny screens inside the eyewear, or projects it directly into the user’s retina.

It may sound impractical, but many companies are already using wearable computers, especially for their blue collar and service employees. Costing between US$3,000 and $6,000, these small and powerful computers are expensive, but there are many situations where donning a hands-free, mobile, and wearable computer could be money well spent.

Take, for example, the airplane mechanic who is working in a tight space and needs to check something in a manual. A laptop computer would be hard to juggle next to a jet engine, and besides, it would delay the repair. The same thing goes for the surgeon performing a complex operation. Here a wearable computer could display critical data -- like MRI images -- right in front of the doctor’s eyes, so that she can continue without having to put down the scalpel.

Using Mann’s experimental ENGware system (read: Electronic News Gathering Wearable) a journalist could draw on his news organization’s resources while out on the field. His editors could instantly send information about related people, events, and places directly into his view.

Mann built his first wearable system three years after Apple launched it’s personal computer -- the Apple II -- and the same year as IBM came out with its first PC.
“Many people consider what I built in 1981 to be the first true wearable computer,” Mann says.

Using a cathode ray tube from a camera viewfinder, and a small TV tube, he created a “personal viewing system” that was hands-free, and had a display that could be viewed while walking around. “It also used wireless communications,” he adds.

Since then, he has more or less lived each day with various models of the contraption, something he has written about in a new book, soon to be published by Random House. “The whole idea of attaching a computer to the body is really strange. When I did this, people thought it was totally crazy,” he explained during an interview in his lab.

On July 5th, he and the student Photoborgs celebrated the opening of an art exhibit dedicated to his wearable computers at one of downtown Toronto’s trendy art galleries, TPW. The fact that he exhibits his inventions as artwork, is only logical to Steve Mann. His first wearable was inspired by a desire to see the world in a new light. These high-tech “rose-colored glasses” that could change the color of selected objects in his view. “I was interested in seeing things differently - in getting different interpretations of the world,” he says.

Looking into Mann’s eyes, it seems as if a camera lens has taken the place of his right pupil, and he talks as if it actually has. (It’s only an optical illusion.) The camera in his “EyeTap” system sits close to his nose, capturing the images in front of him. These images are then sent to an on-body computer, where it can be modified, added to, or subtracted from, before a final “virtual” picture is projected into his eye. He refers to this as a “mediated reality.”

The capability to delete objects that we see everyday can be useful if, for example, advertisements are perceived as an eyesore. In the future, a wearable computer can be programmed to replace the “Marlboro Man” on the billboard with something more to one’s liking – be it Mona Lisa, or Claudia Schiffer.

“Your view is already muddled with all these billboards blocking your view as you walk down the street,” says Mann. “You can’t see the truth because it’s obscured by all these lies. By putting on the glasses you can see your own reality,” he adds.

The same principle for “mediated reality” that lies behind Mann’s EyeTap can be found in his “EarTap” system, which works in a similar fashion, but using sound instead of light. Another related invention is “Blind Vision,” the idea of which is to help blind people navigate by using radar, and a vibrating “VibraVest.” As the radar senses nearby objects, it sends “warning” vibrations to the wearer of the vest.
Mann claims that the radar can even detect if a pickpocket is approaching, by evaluating the speed and pattern of movement.

Few people understood this Canadian prodigy back in high school. He stripped camcorders for parts to include in weird looking hockey helmets with antennas, and had dozens of wires coming out of his eyeglasses, only to disappear under his jacket behind his neck.

He attended Toronto’s McGregor University, but later transferred to the Massachusetts Institute of Technology (MIT). But even MIT’s nerd-laden Media Lab found it hard to accept Mann, who couldn’t part with his wearables, not even for a day. “I was the first person to broadcast my life (from a wearable computer) on the Web in 1994,” he says.

Eventually the idea caught on. He co-founded the Wearable Group at the Lab and his inventions became something of a showpiece. Late in 1997, the Media Lab held a glitzy fashion show with professional models - using sexy, but non-working mock-up wearables.

In 1999, he parted ways with the Media Lab and returned to Toronto, where he now runs the show. The Media Lab continues its wearable program, and the Lab’s founder, Nicholas Negroponte, has recognized him as a “pioneer” in his field.

While the computer industry is fast commercializing the wearable technology, it is not quite clear where Steve Mann is heading. He recently started a company called Existech that designs wearable computers, but it is run by volunteers, and is rooted as much in existentialism as it is in technology.

While there are many commercial niches for wearables, Steve Mann sees his invention as a general, all-purpose tool - much like the PC itself. He sometimes uses it to do mundane chores like grocery shopping. It works like this: As Steve walks down supermarket aisles, his wife Betty Lo logs-on to her husband’s wearable, sees what he sees through his eyeglass-camera, and with her mouse, shows him on his mini-display, which brand of cereal she wants him to pick-up.

Hans Sandberg

“For your own protection”

Living with a wearable computer opens-up a range of questions, from the practical to the political - and even philosophical. What happens to privacy if we are always accessible and “connected”? What happens to individual experience if other people can see and hear what we see and hear?

Early in his career, Steve Mann focused on the practical and moral implications of strapping a computer to one’s body. His conclusion: the wearable computer is a defense weapon against a society that seeks ever more control and surveillance.

Mann loves to show video recordings of himself walking into department stores and asking cashiers or security guards about the cameras hidden behind domes in the ceiling. When they answer that it is for the customer’s safety, he pulls out his own video camera -- or points his wearable at them -- and informs them that he is monitoring them to, for safety’s sake of course.

“For your protection a video recording of you and your establishment may be transmitted and recorded at remote locations,” reads one of Mann’s T-shirts displayed at a recent art exhibition at the TPW gallery in Toronto.

“We already have smart floors, smart ceilings, smart toilets, and smart light switches. We have all this artificial intelligence (AI) around us,” says Mann, pointing to “humanistic intelligence” (HI) as a “counterpoint.”

He wants to empower individuals by adding computer power “to go,” and by connecting them wirelessly, so that they can share information and experiences with each other. “It is the idea of empowering individuals with intelligence in the computational feedback loop. It’s a new way of thinking, and it may solve a lot of problems we have with the reduction of human value through surveillance and A.I,” expands Professor Mann.

“I refer to this as existential technology, where existence comes before essence,” says Mann. “I invented this for some reason, and it took me years to figure out why I was motivated to do that. First you bring something into existence, and the essence comes later,” he adds.

Hans Sandberg

From McDonalds to Mars

Two of the best-known companies building “wearable computers” are ViA Technologies in Minnesota, and Xybernaut in California - but giants like IBM have also developed wearable computers, and recently agreed to manufacture wearable computer systems for Xybernaut.

ViA recently introduced a 20-ounce wearable the size of two walkmans that they are testing for order taking at McDonald’s drive-thru restaurants. They are also testing a mobile security system, together with the U.S. Navy, that uses face recognition software called “FaceIt” (by Visionics) to make it easier for military police to monitor who gets onboard navy ships while in port. The security guard takes a digital photo of the person in question using his eyeglass-based camera, and instantly matches it to a government database. The whole process takes a matter of seconds.

Xybernaut announced on June 12, that their Mobile Assistant system had been chosen by NASA to be worn by humans in a training project – for a trip to Mars. “Wearable computers may be the future for many space missions,” says Dr. Pascal Lee, the project scientist.

Hans Sandberg

Isn’t a Palm Pilot also a wearable computer?

Though the world is full of nerds and businesspeople who carry around small computers and cell phones in their pockets or purses, the wearable computer is a different kind of beast - it is always on, and it is always accessible.

It doesn’t require the user to sit down to use it. It displays its content either on a small screen an inch away front your eyes - or projects it directly onto your retina. You tell it what to do, either by talking to it (voice recognition), or by fiddling with a special device for single-handed typing, like the commercially available Twiddler.

While you have to (or ought to) stop what you are doing while using a Palm computer or Pocket PC, the wearable computer is designed to assist you at the same time you are doing other things.

Hans Sandberg

Freedom to Dial

(Syndicated article for the Metro newspaper group).


Cellphone user in Beijing 2001.

When an elementary school in southeast China exploded in March -- killing over 40 students and teachers -- it was a blast heard round the world, with its story told via telephone and the Internet. And had this tragedy occurred a few years ago, the world may have never known what really happened.

“Everybody knows it was caused by the fireworks,” Zhang Chenggen told the Associated Press by telephone just after the accident. “The government is trying to cover the facts. Please do not believe them,” said this father of an 11-year old boy killed in the explosion.

But as the government officials in the province of Jiangxi erected roadblocks, detained roving reporters, bulldozed the school, and began -- formulating its official account of the blast -- Zhang, spoke candidly to the media and the world: “I was among the first batch of people to rush to the explosion site, and I saw the hands of some dead children still holding fuses.”

The Washington Times reported its phone conversation with man named “Chen” from the local fire department, who said, “debris at the site was littered with firecracker wrapping papers.” And according to the New York Times, reporters reached parents by dialing random numbers within the town’s telephone area code.

Several days later, Chinese Foreign Ministry spokesman Zhu Bangzao called news reports like these “irresponsible…absurd and erroneous,” according to the state news agency Xinhua. “Some overseas media even attacked China by carrying these untrue stories with elaboration distorting the facts,” he added.

Chinese Premier Zhu Rongji would later explain in detail how a 33-year old suicide bomber -- nicknamed Psycho -- had blown up the school and himself.

But while in-person or snail-mail exchanges may have in the past slowed or halted the gossip and anger over this tale of child labor and death, the government was unable to stop the flow of information. “Today people can communicate instantly…200 to 300 million people (in China) have access to one way or another of staying in touch,” said Simon Cartledge of the South China Morning Post. “They can call…page…and they can e-mail,” he added.

It is now possible for residents to buy a temporary cell phone number without registering with the government, and numerous cyber-cafes offer anonymous Internet access (although chat-rooms are on time-delay and are censored by the government.)

“Allowing a huge swathe of its population to communicate openly and freely is perhaps the most astounding change China has undergone over the past decade,” Cartledge wrote.

Perhaps this free exchange of information is what prompted the Premier to later retract his earlier explanation of the cause of the blast. Ten days after the tragedy, Zhu told a live television audience: “No one can cover up historical truth. I want to apologize and review and reflect on my own work.”

Hans Sandberg

Characters and Computers

(Syndicated article for the Metro newspaper group).


Legend's Beijing factory 2001.

In the 1980’s, China opened the door to foreign investments. At first, they tried attracting export industries -- imitating Asia’s “tigers” like Singapore, Malaysia and Taiwan -- but today, it is as much of a priority to build industries that will serve the Chinese market. And at the same time, economic reforms have helped create several very successful Chinese IT (information technology) companies.

China’s economy continues its steady growth, and the IT sector plays a large role, especially in the cities. From Beijing and Shanghai in the east, to Guangzhou and Shenzhen in the south, city dwellers have money to spend, and although these 250 million people represent only a small minority of the country’s 1.3 billion people, their increasing demand for consumer goods is boosting a number of high-tech industries.

For those Chinese who already have TVs, refrigerators, and cellular phones, a personal computer -- or at least a Web TV -- is the next logical step. In Beijing, Shanghai, and Guangzhou, the PC-penetration is said to have reached 25 percent.

China developed their first computer systems in the mid 1950’s, but these were mostly used in scientific and military circles. It was not until hundreds of thousands of personal computers were imported into China nearly three decades later, that the public became aware of them. Many computers however, would remain unused because of software applications were scarce, computer literacy was low, and there were few systems that could deal with Chinese characters (input/output.)

This was soon to change because of China’s economic reforms, not the least within the research sector. Suddenly entrepreneurs emerged, acting more independently even though many still worked in state-owned companies. Most of these highly qualified computer researchers came from Beijing’s many universities and research institutes, including the Chinese Academy of Science’s (CAS) Institute of Computing Technology (ICT) which felt increasing pressure to generate their own income.

China’s leading computer maker -- Legend -- was founded in 1984 by Liu Chuanzhi and ten of his colleagues at ICT. (In the beginning the company was called ICT Company.) These spun-off researchers retained their salaries from ICT, used its resources, and borrowed $25,000 in capital for their new venture. (The government still owns two-thirds of the company.)


Legend's founder Li Chuanzi.
(Photo curtesy of Legend.)

An important reason behind the success of China’s leading PC manufacturers -- such as China Great Wall Computer Corp., Founders Group, and Legend -- was that they all attacked the issue of Chinese input/output. It was a very difficult problem, as they needed large amounts of computer memory to work with the thousands of unique characters instead of the 26 letters of the English alphabet. (Alternatively you needed new mathematical methods to digitally represent Chinese characters.) High-resolution computer screens were also needed to clearly display Chinese characters. Each computer company approached the problem differently.

In 1985, Great Wall Computers introduced its own version of IBM’s PC XT that managed to handle Chinese characters and show them in a higher resolution than their rivals, including a model developed in Japan, that IBM planned to introduce in China.

Founders Group was born out of a large-scale government research project that began in1974 with a goal to modernize the country’s printing business. At that time, it could take up to 500 days to print a book, and daily newspapers were produced by lead-based printing technology.

The company had access to brilliant researchers who developed their own system to produce newspapers and books in either Chinese or Japanese. This system soon became a world leader. Founders is owned by the local Beijing government and Beijing University (which has the nickname Beida,) but is run quite independently.

Legend also understood that Chinese characters were a key problem for the industry and soon found a researcher at ICT that had created a system for Chinese “word processing.” He was brought over and helped them to develop an add-on card for Chinese characters, which during the first three years generated one-third of the company’s income.

Despite their advances in adapting computer technology for the Chinese language, it seemed in the early 1990’s as if Chinese computer makers would be an easy take for the Japanese, Korean, Taiwanese, and American competitors. Foreign brands controlled 66 percent of the Chinese computer market in 1992, and one after another built factories in China to avoid import tariffs, as well as to take advantage of the low Chinese salaries.

“Foreign PC companies dominated the market up to 1996,” says Legend’s spokesperson Catherine Lee. Before this, the Chinese government protected the domestic IT business with import tariffs and other regulations. When the government abolished the protection, the country was flooded with foreign products – a shock for the domestic industry. But this soon changed to competitiveness for many Chinese PC companies.


Legend's spokeswoman Catherine Lee.

“It took some time for our companies to reform and improve their productivity, but after four years Legend started a price war against the foreign companies,” says Ms. Lee. “Before 1996, a PC in China cost about 10,000 Renminbi ($1,200,) which was unreasonable. Besides, the computers that were sold here were not very good,” she adds. In a surprise “attack,” Legend lowered the price on four occasions, and soon became the number one vendor.

“We price cuts, but we were not only competing on price alone -- there are several low cost brands -- but the others offered hardly any service, few application programs, and sometimes not even an operating system,” says Ms. Lee. (This is not as strange as it sounds, since 90 percent of all programs sold in China are pirated copies, and you can buy a copy of Windows on the street for $1 or $2.) “It’s unacceptable for the average customer not to have good service and applications, since their level of computer knowledge is quite low,” says Ms. Lee.

Legend instead went for good-looking and well-designed computers for the mass market. They offered free Internet access for one year, and ran massive advertising campaigns (including one featuring the star of the Academy Award Winning movie: Crouching Tiger, Hidden Dragon.) While foreign companies focused on the corporate market, Chinese brands like Legend kept their eye on the consumer. There is no doubt that the strategy has been successful, both in terms of marketing shares and profits.

Driving today’s Chinese PC market however, is the Internet. “Eighty percent of those we surveyed say that they want to go online,” says Ms. Lee. It may be, as the head of Ericsson China says, that mobile phones and hand-held computers will eventually give people access to the Web. And Liu Chuanzhi recently told Reuters that Legend will “gradually move from personal computers to areas such as Internet access, mobile phones and servers.”

But that doesn’t change the fact that very few Chinese own a PC. With only 24 million computers in China today -- one for every 50 people -- companies like Legend will most probably need their new factories to keep up with consumer demand.

Hans Sandberg

Legend Has It…

(Syndicated article for the Metro newspaper group).

Legend's spokeswoman Catherine Lee showing one of the company's new computers for children.

Legend is a shining star among China’s young and fast-growing computer companies. It has leapfrogged the competition – both domestic and foreign – and captured 31 percent of the PC market in China, as well as 12 percent of the Asian market (outside Japan.) Last December, it opened a new $200 million PC factory, which can build 2 million desktop computers each year.

The factory is located just east of the Summer Palace, in Zhongguancun, an area that is also known as Beijing’s “Silicon Valley”. This is the Haidian district where many of China’s leading universities and research institutes including Tsinghua University and the Institute for Computing Technology (ICT) are located.

This is where eleven ICT researchers set-up a small consulting shop in 1984, and that shop later became Legend. At that time, Legend was among only a few dozen computer stores and small start-up companies in the district. Today, Zhongguancun is hard to recognize. Last year alone, the zone generated $19 billion in income (up 40 percent from 1999,) and 2,400 new companies were added to the thousands that already existed.

Zhongguancun boasts modern factories, office skyscrapers, new apartment complexes, luxury hotels, restaurants, bars and trendy Internet cafes. Traffic crawls on its noisy streets, while bulldozers flatten the old single-story Chinese houses to make room for things new.


Catherine Lee.

Legend’s spokesperson Catherine Lee tells us about the company’s new Intranet, and its new Enterprise Resource Planning system (ERP, i.e. a computer system that integrates all facets of a business, from sales and marketing to corporate planning and manufacturing.) Her company’s elegant meeting room, laptop, and her snappy PowerPoint presentation may not sound like much, but it does reflect a the new style of doing business in China, where previously a reporter would have to “make due” with a party secretary’s political platitudes, while sitting in a meeting room with spittoons and under-stuffed doily-covered armchairs.


A Legend PC for the modern office worker.

Legend has 12,000 employees and a turnover of $2.3 billion. Sales have increased by 72.4 percent on average for the past three years, and profits have gone up 53 percent. “We sold 1.5 million PCs in 1999 and reached our goal of 2.6 million for 2000,” says Ms. Lee, and adds that Legend has been China’s leading PC manufacturer since 1996.

Access to the factory floor is strictly controlled, and photos are not allowed. Past the production flowchart, racks of ready-mounted PCs, and six assembly lines, lies a colossal room - the likes of which you’d find in an IKEA store. The aisles between the huge metal shelves are barely ten-feet wide however, as they are navigated by computer-controlled robots, and not by humans.

On three of the assembly lines (dubbed “satellite” lines,) one worker puts together one computer at a time – start to finish. Ms. Lee says that the average Chinese consumer is still not ready for custom-made computers, but Legend’s vast network of distributors can place custom orders into the company’s e-commerce network via the Internet. The orders are then sent to the company’s ERP system, and will end up on an assembly worker’s computer screen.

It takes 50 minutes to build a desktop PC at Legend’s new factory, plus an additional 1 hour and 10 minutes to test it. “No other local producer has such an advanced capacity,” writes Richard Lo of the Hong Kong-based financial company Ing-Barings, in a report published in February.

The other three assembly lines are called streamlines where, according to the company, computers can be mounted in as little as 20 seconds.

“We have a factory outside of Shenzhen and we are building a new one in Shanghai…so Legend’s capacity should be 4.5 million next year,” says Ms. Lee.

They will need the increased capacity and new factories to face future competition as China joins the World Trade Organization (WTO.) But Legend shouldn’t fear WTO since they already have access to cheap labor (about 70 cents per hour,) and -- as more electronics manufacturers invest in China -- cheap components as well. This combination is hard to beat, so long as China manages to combine economic reforms with political and social stability.

Gone are the days it seems, where the iron rice bowl was a worker’s only incentive. All employees who have worked at Legend for two years are entitled to buy stock options in the company, which is listed both in Hong Kong and NASDAQ. But in case this is not enough motivation, a red banner facing the assembly lines boldly reads: “If you love your country, you have to love your factory.”

Hans Sandberg

Home, sweet digital home

(Published in Metro Philadelphia, November 2000).


The kids room in Microsoft's Home of the Future.                                                          Photo: Hans Sandberg


Bill Gates already has a hand in most everyone’s home these days – from the operating system that controls our home computers, to the software programs they are running. But Microsoft wants to play a much bigger role in our everyday lives, something that is obvious when visiting the Home of the Future on its corporate campus in Redmond, Washington.

A miniscule camera sits atop the gray computer screen that greets people at the door of this futuristic dream home. This, as with all of the home’s other high-tech gadgets, is connected to a central computer - the home server.

The welcoming screen reads: 

16100
159 N.E. Ave
Welcome to the Microsoft Home
Ring Doorbell Leave Message

Microsofts John Gallagher shows the door to the Home of the Future.
                                                                 Photo: Hans Sandberg

The virtual bell “rings” when the visitor touches the screen, and a digital doorman contacts the home server, which in turn lets the homeowner know that someone is at the door. If the visitor is welcome, the door can be opened by voice command, or from any one of a number of control panels throughout the home. In case no one is home, visitors simply face the camera and leave their regrets as a video message.

When it comes to getting into your own home, a retinal scanner is a handy alternative to keys. The scanner compares the homeowner’s retina to the one in the home security database, and when verified, will open the door automatically.

Once inside, a small screen in the foyer (mounted at eye-level), offers information on the status of the home. About the size of a deck of cards, this control panel displays and plays any messages -- whether e-mail or voicemail -- and regulates the lighting, home security, heating and entertainment systems. But the user doesn’t need to fuss with controls, since the home of the future has learned a thing or two about the people living there, and automatically adjusts all systems to fit their personal profile. For example, the house can “greet” the owner by turning on the downstairs lights, playing soft music, and raising the blinds when they walk in the door after a hard day’s work.

Many of these features have been borrowed from the “ultimate” digital home, i.e. Bill and Melinda Gate’s $75 million dollar lakefront residence in Medina, Washington - not far from Microsoft’s campus. Gates doesn’t talk much about his house -- and requires his guests to sign a non-disclosure agreement -- but in his 1995 book called “The Way Ahead”, Gates shared his dream of a home where guests wear digital identification pins, so that the computer system knows where they are in the house and plays music chosen just for them - or perhaps “displays” their favorite artwork on hanging LCD screens. The latter feature is missing in the demo home, which is easy to understand as each flat wall screen costs between $10,000 and $15,000.

The family room is bound to be the next digital battleground, but not even in Microsoft’s version, does it have a PC. The centerpiece is instead a huge projection television, with a 42-inch screen. It is of course, networked, and doubles as a home entertainment control center. Running a prototype of Microsoft’s upcoming software for digital “set-top” boxes, the TV is connected to the Internet, and can detect and control other entertainment units, like CD or DVD players. While leaning back on the couch, it’s now possible to select a video, surf the Web, read e-mail, or change CDs.

The company is also testing a voice control system, which can be used as an alternative to wall mounted controls and screens. With this system, one need only tell the home server what they want. In addition, video cameras -- which are also used for home security -- can help to recognize different people in the house and interpret their gestures. Once they “know” who’s in the room, they can also personalize the environment for them.

John Gallagher, one of Microsoft’s concept home “tour guides”, shows how a tiny box and microphone can be used to literally run the home using voice commands such as “Open the curtains,” or “Turn off the TV.” The technology is not quite ready for primetime however, as it is hard for the system to figure out whether the person is giving a command or just making conversation. To avoid any unpleasant misunderstandings, each command needs to be prefaced with a name. In the case of the demo home, the system is named “MC,” so to turn off the lights, the instruction would be: ”MC, turn off the lights!”

Next to the family room is Microsoft’s kitchen of the future, where a traditional PC sits on the countertop with its keyboard in a separate drawer under the counter. It is hard to picture what this kitchen workstation would look like after preparing a Thanksgiving meal. There are plenty of appliance-like PC prototypes that are small, easy-to-use and out of the way – much better suited for a kitchen.

On the kitchen counter is a small barcode reader, which records the family’s favorite food and beverage products. Once scanned, the data is sent to the home computer, so that groceries can be easily ordered online and delivered straight to the home- in this case from HomeGrocer.com (now acquired by Webvan.com).

In the kid’s room are computers complete with joysticks, a huge yellow trackball for digital toddlers, and steering wheels for the older kids – as well as an Intel microscope that works with a PC. Sega, Nintendo or PlayStation are nowhere to be found, since Microsoft is holding the slot open for its own new super-game consol there -- the X-box -- which will arrive, in late 2001.

The master bedroom lacks in digital gadgets and Gallagher explains that it will be converted to a teenager’s room, making it “more fun” to demo. At present, a telephone with a monochrome touch screen gives people a chance to check their e-mail just before dozing off, and on the end table sits a digital frame, that grabs family photos from the Internet, and displays them. One clever feature of this smart home is that when the lights go off, so do the picture frames.

Today, cable and DSL-modems are becoming more commonplace and many homes are becoming networked. And since this future vision belongs to Microsoft, we had better watch and listen carefully. Why? Because one thing that Microsoft is extraordinarily good at is getting their foot in the front door and making themselves right at home.

Hans Sandberg


Totally wired


Steven Guggenheimer, director of consumer strategy.
                                                       Photo: Hans Sandberg
Why is Microsoft focusing on the “Home of the Future” today?
Steven Guggenheimer, director of consumer strategy at Microsoft, says that they do it simply because they can.

Today’s home has more and more devices that can communicate. One example is Sony’s PlayStation II, which is a not just a gaming machine, but a powerful computer that can connect to the Internet and home computer networks. Telephones and TV’s will soon have software allowing them to talk to other machines in the house, and the day will come when most electronic devices -- from toasters and refrigerators, to climate control and security systems -- can all be linked with one single home network.

The home is also an important target for the next generation of Windows. Microsoft wants to build a sophisticated network of applications and services with its new “.net” strategy. The first step is Microsoft Passport, a program that keeps personal information such as credit card numbers, and individual Internet preferences safe and ready-to-use while surfing or shopping online. This virtual ID-card can be used together with PC’s, handheld computers, and internet-ready WAP-cell phones.

“The technology makes us schizophrenic. We have different address books and calendars in different devices. When information is splintered we end up having to do more work,” says Guggenheimer, who sees ”Passport” as a solution to this problem.

Microsoft’s Home of the Future is in many ways similar to the home prototype Time-Warner built back in 1994 to demonstrate its “Full Service Network” (FSN). The FSN home turned out to be expensive to build and operate, and it took much longer than expected to bring down the price of the $5,000 set-top box that was the center of the house. This time, thanks to the growth of the Internet, much of the infrastructure is already in place.

Hans Sandberg


TV of the future

Microsoft has invested billions of dollars trying to get a foothold in the TV business - first by buying WebTV, and later through a number of alliances geared towards putting Microsoft’s TV-software on as many digital set-top boxes as possible. Their strategy is, in some respects, similar to that of Sony Corporation, which is also working towards using the television as a control center for various home electronic appliances.

Microsoft’s latest product in this field is called “UltimateTV”. TVs that are equipped with UltimateTV services can receive digital satellite TV, and record one program while another is being watched. Direct broadcasts can also be “paused” for up to a half hour, and then begin again as if nothing happened. (In actuality the viewer is watching a show that was recorded on the TV’s computer hard disk.)

It is, however, far from clear that the company will “take control” of America’s living rooms. American Online recently announced their alternative to WebTV -- AOLTV -- and AT&T is testing interactive TV software from a company called Liberate on its set-top boxes (since Microsoft failed to deliver on time). Liberate was founded by Microsoft’s archenemy, the database giant Oracle.

Hans Sandberg

Xbox - The Mystery Box

(Published in Currents magazine 2000).

The Xbox as it looked in the summer of 2000, before its release in 2001.

Video gaming is serious business, not only for the $7 billion in revenues it brought in last year, but because gaming machines are becoming incredibly powerful and versatile. Sony’s new Playstation2 and Microsoft’s upcoming X-box will, in addition to playing games, be able to do most of the things a PC can do, as well playing DVD-movies and MP3-music. This is why Howard Stringer, president of Sony America, has called the PlayStation2 a “Trojan Horse in the home.”

Microsoft’s X-box will have a 600+ MHz Pentium III processor, a fairly big hard drive, and run computer graphics five times faster than the already super fast PlayStation2.
With so much power, and a fast connection to the Internet this machine is not just for playing Banjo Kazooie and Mario Party. “Clearly, it will be the world’s best web browser, and spreadsheet machine,” says Richard Doherty, a Senior Editor at the Long Island-based consulting firm Envisioneering. He ads that it may also be used to run business software rented over the net from Application Services Providers.

In the late 90’s you could hear totally wired pundits ruminate about the imminent death of the TV, but it never happened. Instead, the TV and the PC learned from each other. The PC was the quickest to learn, but it is not (and will probably never be) an ideal platform for gaming or entertainment software.

Today, the PC is the most popular way to surf the Web, but this is bound to change, as our game consoles are hooked-up to home networks, which are linked to cable or DSL modems. And the “brainless” TV will acquire some smarts from the next generation of digital set-top boxes, which are just around the corner. Then there are the hybrids, like Microsoft’s Web TV, which lets you surf and read email on your TV set.

Evidently there is some convergence, but the PC and the TV are fundamentally different: The first is a tool, while the latter is a media for consumption. In front of the PC you work, and when not, you still have to concentrate, and hold on to that mouse. In front of the TV you can sip on your soda, munch on potato chips, and most importantly, do it together with other people. When grabbing the videogame console, you have to put down the soda and grab the game controller, but at least you can lean back while letting the adrenaline loose.

Microsoft’s X-box can be seen as an acknowledgment that the PC is not a good gaming platform. It is too complicated, slow and unreliable. Who needs a Fatal Error in the middle of E.R.? The strength of the game consoles comes from the fact that they were built for playing games. But to keep up with the gowth of the Internet and the huge potential of Web-based gaming, they are forced to go online. And once they are hooked-up, the door is open for a broader interactivity, including electronic shopping, entertainment on demand, and content delivery (games, software and MP3-music) via the Internet.

As for Bill Gates, gaming is an old quest. He’s had his eye on this market for a long time, but few thought his “microserfs” could create cool consumer content, and machines to run them on. The X-box tells us that this is not only a serious, but dangerous player. When it arrives in the stores late next year, it will be much more powerful than PlayStation2. And as it will be built around a stripped-down version of the new Windows 2000 operating system, it will be easy to move Windows games over to the X-box. This is crucial, because it is hot new games that sell the hardware, not the other way around.

Hans Sandberg

Fishing For Health In Iceland’s Gene Pool

(Published in Metro Philadelphia and Metro Toronto in spring 2000).

Kári Stefánsson, founder of deCode genetics.

Iceland is known for its fish and its storytelling, but the latest saga from this North Atlantic island involves genetics, genealogy, and a brilliant and hard-nosed Viking, Kári Stefánsson. Iceland’s uniquely homogeneous gene pool may speed-up the discovery of disease-causing genes, and change the face of modern healthcare. Stefánsson’s company - deCode genetics – has been licensed by the Icelandic government to build a national health database, which will house the medical records and DNA blood samples from just about every single Icelandic citizen.

The isolation, the climate and the rough, inhospitable nature of Iceland have always been the curse of this volcanic rock, ever since the first Vikings landed here in the 9th century. Today, Iceland is a modern nation of some 275,000 Viking descendants, living only a few hours by air from New York, Paris and London. The standard of living is high, and Icelanders are among the most “networked” people in the world, whether measured by Internet access, or by cellular phones per capita. Still, the isolation is there, especially for researchers and the highly educated, who often venture abroad for a few years, but usually find their way back home.

In Stefánsson’s case, his visit to the United States lasted twenty years, and he would probably have settled for his prestigious job as professor of neural science at the Harvard Medical School, if it weren’t for an idea: To blend modern biotechnology with Iceland’s pristine gene pool, rich genealogical tradition, and modern information technology, in order to accelerate the discovery of the genes that cause specific illnesses. He returned to Iceland in 1996, with $12 million in venture capital for a project that ignited the hope of a new industry -- and maybe a new future -- for Iceland. This was badly needed in a nation heavily dependent on more traditional fishing and metal processing industries. Where others saw isolation, he saw a unique resource in the global race to decode the secrets of the three-to-four billion parts of a genome – which make up the human genetic code.

One of the greatest promises of modern biotechnology is that it will improve healthcare dramatically, so that illnesses one day may be cured the way “bugs” are fixed in computer programs, i.e., by replacing faulty code with good code. The potential is mind-boggling, but before this becomes a reality, scientists need to “download” the genetic code from the human body, and then understand it. This is extremely difficult because of the enormous amount of information involved. And since the same disease can be explained by mutations (changes) in several genes, researchers are often led astray when trying to find the connection between illnesses and specific genes. The larger and more mixed the population is, the harder it is to find the right connections.

This is why Iceland is so attractive. Its entire population is descended from only a few hundred Norwegian refugees (and the Celtic women they brought along.) Over time the original gene pool was made even smaller due to a series of disasters, and the harsh living conditions on an island where only one percent of the land is arable. Sad as it was to the struggling Vikings, their demise makes gene discovery easier here than anywhere else in the world.

Aside from a genetically homogenous population, Iceland has had a nationalized healthcare system since 1915, and has long collected health data on its inhabitants. Add to this a rich, and living tradition of genealogy, which makes it possible for Icelanders to trace their ancestry back several hundred years. This was a tradition born of necessity, since the Icelandic method of naming is very confusing – children are not given their father’s last name, but the father’s first name plus the word “son” or “dottir”, depending on the gender of the child. Famous example: Erik the Red’s son was named Leif Eriksson (literally Erik’s son), and a daughter born to him would have the surname “Eriksdottir.” Since it is so difficult to track down your extended family, written genealogy is paramount to avoid inbreeding among this small population.


deCode genetic’s laboratories outsideReykjavik.

DeCode’s laboratories, located just outside Reykjavik, Iceland, are full of young researchers in white coats, who represent some of Iceland’s most talented (one third of the 300 people who work at deCode have a Ph.D.) They are busy extracting DNA from blood samples sent in by participating doctors and analyzing them using state-of-the-art machines, to create genetic “maps” for each chromosome.

So far, the researchers have received DNA samples from about 20,000 patients who volunteered to be part of the project, and add their genetic “fingerprints” to the heath database they are creating. This information will be then be compared against a huge genealogical database that deCode also built with the help of its 15 in-house genealogists, one which can trace the ancestral roots of just about every one of the 700,000 to 800,000 Icelanders who have ever lived.

Thordur Kristjansson, a programmer, demonstrates how he with a few clicks of the mouse, can track down an Icelander’s roots back to the 9th century - and as a bonus he tracks the lineage of Kári Stefánsson eight generations back to find that he is related to the current Prime Minister of Iceland. Even further back it is found that Stefánsson is related to the famous Icelandic Viking poet Egil Skallagrimson born in the town of Borg in the year 910. (When doing genetic mapping, all of the records in both these databases are encrypted for privacy protection, so that all the researchers can see are anonymous, numeric “tags”.)

While most genetic researchers are attempting to map the complete human genome, deCode is opting for a shortcut: “I can take 1,200 individuals with a certain disease and run it against our genealogical database. The result will be a map that shows exactly how they are related -- not only siblings and cousins -- but distant relatives. This is very important when you study complex diseases,” Stefánsson says.

Instead of a physician relying solely on an individual’s medical history when diagnosing, deCode proposes finding the genetic basis for a certain disease through family ancestry and the medical records of the extended family. In this way, you don’t need to understand the genetics of an illness when you start your search for a diagnosis. “You can get around it if you have a lot of knowledge about the population’s genes, the environment and illnesses. Then you can simply search for matching genes without any hypothesis. “That’s why I proposed a centralized health database,” he says. That is, you don’t need to know what you are looking for, just throw out a net to see what you catch. His current “fish pond” is too small however, why he would like every Icelander to be entered into the database.

It may still be too early to judge deCode’s success, but early indications look good.
“In recent months, Stefánsson’s gene sleuths have pinpointed the locations of disease genes at astounding speed,” Ingrid Wickelgren wrote in the January issue of Popular Science Magazine. Last year, deCode located the gene for osteoarthritis - a form of arthritis. This was the first breakthrough in a five-year joint project it has with LaRoche, which began in 1998. The Swiss pharmaceutical giant gave deCode the job of tracking up to 12 common diseases, and agreed to invest $200 million in the company.

The next chapter of Kári’s saga started on March 9, when Delaware registered deCode genetics announced that it has filed for an initial public offering (IPO) on Nasdaq. Coming on top of a spectacular boom for biotechnology stocks, it seems as if the company may have struck “gold”. But the goal is more than money: “We want …to be able to do genetic research in a more efficient manner, and to be able to create programs for decision support in health care,” says Kári Stefánsson, who admits that he is surprised doctors don’t use computers more often to diagnose patients.

A doctor’s medical knowledge is after all “incomplete, imperfect, and under constant decay,” while the “knowledge base of the profession is growing…and getting harder to handle,” says Stefánsson. “You can’t even withdraw five dollars from your bank account without software, but a doctor -- even in the best of institutions -- only uses his brain,” he adds.

Hans Sandberg

Innovation in Welfare Sweden

(A shorter version was published in the International Herald Tribune, a publication of the New York Times and Washington Post, in June 20, 1989. The entire article was published in Italian in Suecia l'Oggi in Italy 1991. )

Sweden, with a population of only eight million people, boasts an impressive range of internationally renowned companies such as Volvo, Saab, Ericsson, Asea (ABB after the merger with Brown Boveri of Switzerland), and Electrolux.
You would therefore expect to find an excellent climate for innovation in Sweden. However, its inventors, innovation researchers and others in the field, paint a more complex picture.

Swedes, like other people, want innovations, hence the need for innovative minds. But who would like to see their son or daughter marry an inventor?
-Remember that I am a researcher, not an inventor, says one Swedish creator of new technology, in a typical statement.
-I am sixty years old, but I cannot recall ever saying with pride that I am an inventor, says Olle Siwersson, Chairman of the Federation of Swedish Inventors.
The inventor is a risk-taker, and most people don't like taking risks. This is not an exclusively Swedish attitude, but through its welfare system, Sweden managed to eliminate risk-taking for the individual more than in most other Western countries.
Add to this the anti-capitalist and anti-technology trend that followed the rebellious year of 1968. However, with the eighties came a fundamental change of climate. A key factor behind this was the Swedish industrial crisis in 1977-78, which forced the nation to search for new industries and products to replace the faltering ones.
-Gone are the days when the technician was an easy prey for anti-business sentiments. We have also had a dramatic increase in the creation of new businesses, says a leading Swedish expert on innovation, professor Bengt-Arne Wedin, at the Royal Technical High School in Stockholm.

Today you find some 400 small start-up companies clustered around Sweden's technical high schools from Luleå in the North to Malmö in the South.
-We overcame the anti-technology mood. The attitude today is pro-technology, says professor Torkel Wallmark. He is chairman of Chalmer's Innovation Center, a partnership between Chalmer's Technical High School in Gothenburg and private interests, which aids the 135 start-up companies around the school.

Local authorities, sometimes together with retired businessmen, help inventors to create new businesses and new jobs. Yet another sign of this pro-innovation trend, is the growth of the Federation of Swedish Inventors. Ten years ago, there was only one local group. Today there are more than one hundred.
Mr. Siwersson, however, still worries about his country.
-The problem is that other countries are also very good, perhaps even better, at starting new production based on new ideas. Just take a look at Japan - it's scary!

This is of no minor concern. Sweden's industry and welfare system is heavily dependent on foreign trade. It exports almost 38 percent of its GNP, and half of its industrial production.
Many of its leading industrial enterprises grew out of 19th century technological inventions or innovations. But since World War II, hardly any major new company has been built on new technology.

The Social Democratic governments have tried to stimulate new technology and new industries with direct and indirect support.
-When I took up this trade twenty-one years ago, there was no National Board for Technical Development (STU) or public support at all, says Mr. Siwersson. If your invention wasn't ready when your money ran out, you were finished.

STU, founded in 1968, is the main public source of funds for new technology. Last year it spent 850 million Swedish Kronor (about 135 million US $) on about 3,000 projects. Forty percent was spent on technological research at high schools and research institutes, another forty percent on development and diffusion of new technology in industry. The rest was spent on individual inventors, small and mid-sized companies, and start-up companies. STU funds 80-85 percent of all new companies in Sweden.
-No other country gives as much state support per capita to its inventors, says Mr. Wedin.
Sweden's growing research and development (R&D) spending matches that of Japan's and the country now allocates three percent of its GNP towards R&D. Swedish industry, especially its big members, account for most of the R&D. The public share is small, but increasing.

Despite the R&D push, a surprisingly small portion of the industrial production - only seven percent - comes from the hi-tech sector. It is the low-tech, raw material-based industries that dominate the industry and employ half of the industrial workforce. This will continue to be the case, as long as the medium and high technology industries stagnate or shrink.

This is troublesome, as the high-tech industries show the fastest growth in the world market and the most job opportunities.
The Social Democrats have preferred large companies, rewarding them with generous tax breaks, as long as they reinvested their profits. The managers of Sweden's big corporations didn't mind this.
-As we don't have any home market, we have to get out into the world and fight with the dragons. That's why we have a comparatively concentrated industry says Hans Werthén, Chairman of Electrolux and a leading Swedish industrialist.

This is perhaps the most fundamental fact of the climate of innovation in Sweden. In the United States there is a huge internal market and a multitude of different companies. Japan is more dominated by big corporations, but they are much more diversified than Sweden's. This gives the inventor more freedom to expand into different areas.
-If you have talked with one company in Sweden, you may have talked to the whole market, says Curt Andersson, Director at the Federation of Swedish Industries.

He claims that the industry today is much more open to new ideas than before, even though the main interest is in those innovations, which supports its core business.
How you feel about being inventor or innovator in Sweden, therefore depends on whether or not you are in the mainstream.
The large companies will probably support you if you are in the right field. You then have the chance of making a small fortune by selling your company.
-Many start-up companies are being bought by big companies, says Sören Sjölander, a researcher at the Department of Innovation Research at Chalmer's Technical High School. We showed in a research report that these companies actually grew faster after having been bought.

This doesn't mean that you have to sell out to survive.
-An independent innovator can do things of great interest to Sweden's core business, says Mr. Andersson.
This is made easier with the spread of powerful and affordable personal computers and workstations.
-Suddenly, you can develop incredibly fine solutions, in a way that was not possible before. There are many more interesting and potentially dangerous ideas out there, and I believe the industrial managers understand this, says Mr. Andersson.

Perhaps they do, but are they are really looking for inventions?
-They want innovations; they want an invention that has proven itself on the market. They want to bet on the horse after it has won, says Mr. Siwersson.

What if you are not within the mainstream or if your invention is totally new?
This was the case for Torbjörn Lagerwall and his American colleague, Noel Clark, at the Chalmer's Technical High School. They developed a radically new display technology, based on a scientific discovery in the field of liquid crystals (a technology used in lap-top computer screens, digital watches and pocket TV's). After having courted the Swedish industry for a long time, the two researchers finally turned to Japan for help. Last year Canon presented a prototype of a ferro-electric liquid crystal (FLC) screen with ultra high performance.
-Sweden is an extremely narrow-minded country, says Torbjörn Lagerwall. You are supposed to have to the same opinion as everybody else, whether it concerns theater, literature or physics. You should stick to what is already being done, to what is already known.
-The Swedish industry defends itself by saying that Sweden is a very small country. Why is it then that the Finns, who also belong to a small nation, can be so open-minded? They showed much more interest in our work than the Swedish industry did, he says.
To set up a factory that can produce FLC-screens would cost at least 100 million Swedish Kronor (about 15 million US $). That is too much for a start-up company in Sweden. It would take a company the size of Ericsson, but they were badly burnt when they tried to get into the personal computer business. Since then it has been "back to basics".

It is hard to argue that Ericsson should not focus on telecommunications, but for Sweden such a strategy presents a dilemma.
-Here we have a potentially gigantic market, but we don't have industries working on it, says Sven Ingmar Ragnarsson, responsible for the FLC-screen project at STU.

This is not an isolated case. Spine Robotics with its innovative robot products was recently sold to a Japanese company, although Sweden's Asea Robotics is a world leader in the field.
-I don't believe Sweden can do without specialization, says Mr. Sjölander. We are a very small country and we cannot afford a highly diversified industrial structure. Instead, we need a built-in mechanism to detect changes early and quickly adjust to them.

The key word here is flexibility.
-What is the point of being number one in mechanical cash registers, when the world has gone digital, says Lennart Ståhl, in charge of innovation at STU.

Sweden must find new industries to replace those who becomes obsolete, but how? The big corporations are fully occupied with their core business.
-We have very little of the American model where new technology leads to new enterprises, as was the case with Apple, Compaq, Control Data, Digital Equipment, Data General, Intel and so on, says Mr. Wedin.
-The large companies are not good at handling products based on new technology. That is why we need small enterprises, says Mr. Ståhl.

New ideas pop up all the time, but without a good climate for small start-up companies, they will all to often pop out of the country.
STU helps out in the early stages of the innovative process, but in the later, more costly stages, the Swedish inventor runs into trouble.
He needs capital desperately, but he has no product to sell yet. What he needs is an investor who is willing to risk money for a long enough time to get the business going. He needs venture capital.
More importantly, he needs the knowledge of the venture capitalist.
-The entrepreneur, a rich person who works with and acquires knowledge about how to start companies based on new technology, has a tremendously important structural function, says Mr. Sjölander.

Sweden saw the growth of a venture capital market in the early eighties. But it was more capital than venture, says Ingemar Ahlandsberg at the Ministry of Industry. When the quick results didn't show up, the market collapsed.

To a certain extent the big corporations act as venture capitalists in Sweden by supplying capital, their competence and knowledge of production and markets.
-It is very hard to develop new products in Sweden with venture capital, says Peter Weisglass, head of the Swedish Institute of Microelectronics in Stockholm. I have looked at balance sheets of start-up companies in the US and not one of them I examined would have survived in Sweden.
-The profit is taxed more than once down the line to the stockowner in Swedish companies, which is why it is extremely unfavorable to cash in the profit, says Mr. Wedin. The owner is better off if his company re-invests the capital in old activities that yield a moderate profit, than if he withdraws his money and invests in something that yields a higher profit.

Not surprisingly, the venture capitalist is rare in Sweden. Why take big and long-term risks if you cannot get big rewards?

The sharpening international competition is now turning this question from a moral one to a practical one: How to avoid the threat of losing world market shares?
A recent report from a government think-tank, Statens Industriverk, stresses the need to improve the business climate, both for the big and increasingly trans-national corporations, and for small start-up companies.
This reflects the growing insight that this time it is "Moder Svea" (Mother Swede) who has to charm the industry - large and small - and not the other way around.

This looks like a good sign for Swedish inventors.

Hans Sandberg

Success in Beijing's Silicon Valley

(Written for the International Herald Tribune after my third visit to China. It was scheduled to be published on June 4th, but this did not happen due to the Chinese government's crackdown on the student rebellion.)

Wan Runnan, founder of Stone Group, and a
"most wanted" fugitive after June 4th, 1989.

In Beijing's Silicon Valley, the spirit of freedom and enterprise has given rise to new kinds of Chinese companies and leaders. The Stone Group, nick-named "China's IBM", is one of them.
-Our success is the success of market economy. For China, Stone's way is a way out, says its founder Wan Runnan.
China's new entrepreneurs challenge the country's ossified economic system as radically as the students challenge its ossified political system.

A group of researchers left their secure jobs at the Chinese Academy of Science (CAS) in 1984. With a 20,000 yuan loan they started up their own company employing 64 persons. The first product was a computer printer made by the Japanese firm Mitsui to which Stone added computer software to handle Chinese characters. Soon they struck a deal with Mitsui where the Japanese supplied the hardware and the Chinese the software. It worked out well and in the summer of 1987 the two companies started a joint-venture.

Stone's most famous product is an electronic typewriter which can handle both Chinese and English. Stone controls 80 percent of the Chinese market by selling about 20,000 units a year. An electronic typewriter may not sound like much, but just imagine a country where almost everything has to be written by hand! This was the case in China until recently, and the promise of Chinese character word processing was one of the reasons why the Microcomputer Revolution became so popular here.


Stone Groups headquarters in Beijing's Haidian District.

Like International Business Machines (IBM), Stone started outside the field of computers. Today Stone is one of China's leading computer companies. It is a mother company with 20 specialized subsidiaries, four joint ventures with foreign companies and three joint ventures with domestic companies. Two thousand people work for the Stone Group - half of them in Beijing.

The reputation of its management has grown so much that it was offered to take charge over the largest computer and electronics company in the Yunnan province, the Yunnan Electronics Factory (YEF) with 900 employees. And so it did last February. Stone gets 40 percent of YEF's above-plan profit.

The core of the emerging Stone conglomerate is Stone Group Ltd, which employs about half of the total staff. This company had a turnover of 317 million yuan in 1987 which more than doubled in 1988, when it reached 700 million yuan.

It is also one of China's new stock companies and recently began sell stocks to the public.
-We are aiming for the world market and want to attract investments, says Li Yichuan, Stone's P.R.-manager. It is a better way of managing the company and the public supervision leads to better management. The ownership will also become clearer.

This ownership question poses a problem, according to Mr. Li. He explains that it is difficult to piece it into the accepted formula for a "non-government collective enterprise".
-It is owned by all employees. We are trying to solve this sensitive question through stocks as you cannot come out and say that it belongs to a "so-called non-government collective".

Who really controls the company? Is it the president or the Communist party secretary?
-We don't keep two parallel systems. The president is also the leader of the party, says Mr. Li. We don't have any labor unions, because we have harmonious relations within the company.
An employee at Stone makes about twice as much as other workers in this country who earn an average of 120-400 yuan per month.

What more than anything else separates Stone from other Chinese companies is its corporate culture. The published annual report (in itself a rare thing in China) reflects this vividly:
-Stone's superiority lies in its independent and responsive policy and management which takes market trends and needs as its guide. Furthermore, resources are allocated to where the economic benefit will be the greatest, and our personnel are placed where they can be put to maximum use.
-State-run enterprises have few or none of these characteristics, the report continues.

And under the headline "The key to success" we read "At Stone any mistake is tolerable except that of suppressing talent".

43 year old Wan Runnan is the man behind Stone's philosophy. After graduation from the famous Qinghua University in 1970 he was assigned to work for the department of Computer Science at CAS. He has studied this subject in both Japan and the United States. According to one report, he is good for 30,000 yuan per year, making him one of China's best paid managers.
-Stone group has three advantages, says Wan Runnan, when asked about the secret of its success. We have a rice bowl made of mud instead of the iron rice bowl, that is, everybody in my company has to work hard to get a good salary.
-Secondly, we put great emphasis on the market. It is still controversial in China whether we should have market economy or planned economy. Stone's success is the success of market economy. Stone's way is a way out for the Chinese economy.
-Thirdly, we pay great respect for talented people. We have a lot of them in China, but they are held back by the old system, which makes them stupid and lazy. With us, however, they are clever and hard working.

Would you like Stone to be like IBM?
-IBM is very successful, especially in computers. I went to an IBM seminar before I started this company. I was greatly impressed by their management methods and products, but we have specific conditions in China and cannot copy them. We must have our own understanding.

Stone Group is based in the Haidian District, north-west of Beijing. I visited the area for the first time in May 1985 although there was no talk then of a Silicon Valley. Professor Wu Jikang, who built China's first computer in 1958, took me for a walk down Haidian Road. We visited a couple of unimpressive computer stores which sold imported personal computers, home-made IBM PC-clones and Chinese manuals for computer software. I was more impressed by an advanced mainframe built by the Institute of Computing Technology (ICT), which he was heading.


Professor Wu Jikang and the writer in May 1985.


A computer store in Beijing's Silicon Valley 1985.

In March of this year I again visited the Haidian district and could hardly recognize the place. There were computer and electronicscompanies not only along Haidian Road, but as far as the eye could see. According to the official magazine Beijing Review, this is now the country's largest computer market.

The Central Government last year passed new laws giving new companies in the Beijing New Technology Industrial Development Experimental Zone (BEZ) considerable tax breaks.

The interest in this area is nothing new. The government has invested ten billion yuan (1 dollar=3.71 yuan) here since 1949. As a result you find 80,000 researchers and technicians as well as 50 universities and 138 research institutes within the zone.

What is new, however, is the effort to break through the walls which prevent productive cooperation between research and industry in China. Many scientists start up new businesses or work for new institutes dedicated to the commercial exploitation of scientific research. No less than 11,000 researchers and technicians are working in the area's 640 hi-tech companies, compared to 3,800 and 150 respectively about a year ago.

The turnover of the area's companies was 18 million yuan in 1984. It reached 900 million in 1987 and last year it leaped 56 percent to 1.4 billion yuan (380 million dollars). Exports quadrupled in 1988 to 13 million dollars.

There are, however, those who dislike the talk about Silicon Valley. One of them is Li Yun, the reform-minded president of Beijing's Computer Factory No. 3, located in eastern Beijing.
-Silicon Valley?! Hah! They just sell something that they bought abroad from some other sellers. Silicon Valley (In California) produces and develops products. Here they don't develop or produce anything, says Li Yun.

But Gao Jian Yu, vice manager for Syntone Corporation, one of the leading computer companies on Haidian Road, defends Beijing's Silicon Valley.
-In the beginning we had very little experience, so we had to start by getting into the market. Now we have developed more than 80 different new products, and one of them, a sensor, won a gold medal at a Technology Fair in West Germany in 1987.

Hans Sandberg

Footnote 2007: Wan Runnan landed on the Chinese government's "most wanted" list after the crackdown on June 4th because of his support for the student protest, but he managed to flee the country.