IBM Corporation (NYSE: IBM) is a high-profile high-tech company, which has operated in Israel since 1949. Despite its long history here, it drew little attention in the R&D sector until six months ago, with the first of three acquisitions.
IBM acquired XIV Ltd., FilesX Ltd., and Diligent Technologies Corporation for an estimated $500-600 million altogether, but this is only what is visible on the surface - the checks signed for the deals. Behind the scenes, IBM is trying to turn its Israeli R&D activity, launched with a laboratory in Haifa in 1972, into a large and significant business that will generate in-house growth and eliminate the need for more acquisitions.
IBM's R&D activity in Israel included centers in Haifa, Jerusalem, Rehovot, Tel Aviv, and Herzliya. The biggest operations are in Jerusalem and Rehovot, which handle the new Systems and Technology Group (STG) Lab and the Software Group (SWG). IBM's R&D activity in Israel has 750 employees altogether.
Israel Software Lab director Dr. Daniel Yellin, IBM distinguished engineer, is responsible for the main activity, which has attracted a lot of attention in recent years. Except possibly for Cisco Systems Inc. (Nasdaq: CSCO), the IBM SWG Lab in Israel is based on more acquisitions than any other international company active in the country. He told "Globes", "Part of my job is to integrate the acquired companies. The new employees face much more bureaucracy because it's necessary to comply with IBM's procedures. IBM, for its part, does not intervene on a day-to-day basis, and employees can speak almost immediately with project leaders."
Yellin's comment is especially relevant with regard to employees of XIV and FilesX, some of when went in new directions after the acquisitions.
"Globes": IBM is anything but a start-up. Can it really offer employees of the acquired companies to work for a big corporation when they've received a lot of money as part of the acquisitions?
Yellin: "I'm not saying that there are no problems, and some employees will want to go. But there are a lot of opportunities to do things that a start-up can't. We can influence IBM's future directions and employees love it."
IBM Israel's main R&D activity is two main areas in Jerusalem. One is metadata management (management of data about data) to rank and sort enterprise search engines. Yellin does not hesitate to declare, "We have the best enterprise search engine."
The second field is joint development projects, including instant messaging, and voice products. Yellin says, "We were given IBM's entire voice sector this year and we'll begin to develop voice identification applications and its use in telecommunications."
Yellin started his career at IBM as an insurance software applications researcher. He notes that R&D in Israel is not conducted in an ivory tower, but to meet needs on the ground. "The difference between innovation and mere invention is to simply talk with customers," he says.
Published by Globes [online], Israel business news - www.globes-online.com - on July 7, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008