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Interview of William Brinkman by Sheldon Hochheiser on 2006 April 26,
Niels Bohr Library & Archives, American Institute of Physics,
College Park, MD USA,
For multiple citations, "AIP" is the preferred abbreviation for the location.
Topics discussed include: his family and early childhood, education at University of Missouri, PhD in 1965, Bell Laboratories, research on spin fluctuations, metal insulator transitions and helium III superfluidity, Phillip Anderson, Arno Penzias, Kumar Patel and Sandia National Laboratories.
This is Sheldon Hochheiser. April 26, 2006. I’m here in Princeton, New Jersey, with the past Vice President of Bell Labs, Dr. Bill Brinkman, to continue the interview we started in March. Good morning.
Morning. So we’re back to 1987, right?
Right. I guess the first question is can you think of anything before 1987 that we didn’t cover?
Well, I don’t remember everything we covered. But I don’t think there’s anything that we didn’t cover particularly. I can remember we talked something about functional MRI and that sort of thing at some stage in there, right? But that was all when I got back from Sandia.
In that case, we haven’t talked about it yet because we didn’t get to it chronologically. When you went to Sandia, it was with the understanding that you would return after three years.
That’s right. Bill Slichter was one of the people that was in Physical Sciences. He had the materials organization. He was a level up from where I was when I left. The idea was that I would come back when he retired and take his job. Although what happened in the end was that Kumar took his job. Kumar Patel took his job, and I took Kumar’s job. So we shuffled around a little bit in a different way than I first had thought was going to happen.
Did you ever give any thought to not coming back and staying at Sandia?
Yes, I did. I really liked Sandia, and my wife really liked living in Albuquerque. So we did think about staying in Sandia. But the problem with Sandia is that it’s a— You know, you’re on a military base. It’s all cloak-lined secrecy and all that sort of thing. And I just didn’t want to stay in that environment the rest of my life. I just didn’t like the idea of being in this military, secret environment all the time. And so we came back.
So you came back and took Kumar’s job, and he moved over to Bill Slichter’s position.
What was your position when you came back?
Well, Head of the Physics. At that time, it was Physics Research. A few years later when Kumar left, we combined the two divisions into one. In fact, we combined a lot into one. Eventually, I was Head of Physical Sciences rather than Physics. I had about half of research, or a little more under me in that job. It was a whole sequence of things that we went through that had to be redone when I got back… Of course, the Physics Organization was still very, very research oriented in those days, in 1987. But research dollars were funding a lot of activity in the more applied areas having to do with microelectronics.
So was this different than how the money was handled in ’84?
No. This had gone on for a very long time that research dollars were used to support microelectronics research. But then things changed, in ’87 or not very long after that, we were a part of AT&T, which was just Long Lines and Western Electric. What happened is that Charlie Brown and the people who were heading AT&T were trying their best to figure out an organization that would run AT&T effectively; not research, they didn’t want to worry about research. So they finally found a business unit structure and the sub-business units that they created. By doing that, they made the various units responsible for profit or loss. That was a big thing. And then shortly after I was back, maybe a year or so, and they decided to allocate the research dollars according to how much development work each business unit did. And so all of the sudden these business units had a bill from research that subtracted from thier profitability. So all of a sudden we had all the business unit heads in our offices wanting to know what we were doing for them. So it was a very different attitude.
Enormous change from just answering to the CEO.
Yes. We used to just answer to the AT&T headquarters—Charlie Brown, Bob Allen, and those kinds of guys. They were generally over the years, extremely supportive. What we did in those early days, we’d go into New York, to AT&T headquarters in those days, and there would be the governing board, which was a group of people under the CEO, who would listen to what we proposed and they would come back with a reasonable budget. That was more or less the way it went every year.
This was before you left.
Yes. Well, even when I got back, we were still doing this.
Even when you got back in ’87, it was still…
Still that way. But then when they put this new rule in, in the late ’80s—’88, ’89, I can’t remember what year it was—this changed the dynamic quite a bit. And it became obvious to Arno and myself and I think others that research wasn’t going to be able to sustain itself the way it was. There was a whole host of imbalances that we began to recognize. First of all, the enormous physical sciences and material science and microelectronics research. And the Microelectronics business wasn’t that big a business. So here is a company where most of the revenue, frankly, was coming from a telephone company, from long lines, the long-distance company. Or from network systems, which was another level just below. Yet the research dollars were mostly funneling towards microelectronics. This was clearly an imbalance. I mentioned the fact that some of the research dollars was in fact going to their more applied organizations for microelectronics.
One of the first things we did after I got back was moving these applications people into research. So we got together, all the research activity so that we could manage it. There was just an enormous amount of redundancy and overlap those groups.
Because there were multiple microelectronic groups?
Well, there were groups in research doing more researchy aspects of the same thing that people in the applied areas were doing but in fact the work was really very duplicative. And so this was a serious problem. That problem along with the fact that all of a sudden everybody was expecting more from us at the higher level, at the network systems level led to real challenges. We began to realize that this was not a sustainable situation. And so by ’89 or ’90, we really started trying to think about ways to change. And Arno made I think one of his best moves somewhere in there. I’m sorry I’m really a little loose on dates here.
The dates from the business side I remember. ’89 is when the business unit structure came in after Bob Allen became CEO.
Right. Okay. And it was Bob Allen who did that. That was when we saw this change. In the first year or so when I was back, it had not happened. But we did try to consolidate research spending. But I always remember there was this one meeting. It was somewhere in that period of time. In research there was this, long tradition of having a monthly meeting with the Vice President and people at the director level. So this was a monthly meeting. And in this meeting, Arno was complaining that we weren’t doing enough with the business units. And finally, Chuck Shank had the nerve to raise his hand and say, “Arno, we don’t know anything about the business units.” [Laughs] You know, we were people who were focused on doing research, and our world was the research world. We were competing with universities, national laboratories and other laboratories. The rest of the business wasn’t something we knew much about.
So Arno made his first move there, and that was he appointed each director to be an interface to a specific business unit. That forced them to go to the business unit meetings and get acquainted with what their needs were. That was a very good move, in my opinion, to get started. It made quite a difference. So that was really the start down the trail of getting organized to do more applied things.
What business unit did you…?
Oh, I was assigned to Microelectronics, of course. Also for a while, I was actually was interfacing to Long Lines. Bob Renali was heading Long Lines in those days, and he was a good friend of mine. He and I had known each other a long time. [Laughs]
Right, so. It made sense to build on the relationship.
Right. So that was early on. I don’t know exactly the date on that. But it was in that period of time when this business unit structure got going. It must have been ’89, that sort of thing.
Well, that’s when the business unit structure got going. So.
But you know, then over the next several years, we gradually changed research. Arno stayed on until ’95. During that period of time, we rearranged things. We tried to pull everything together that had anything to do with silicon research and put it in one laboratory. That sort of swept up everything into one. All this time, what we were trying to do was just reduce this overwhelming amount of physical sciences compared to computer sciences and systems engineering and stuff in research, because after all, this company was three-quarters Long Lines and one-quarter Western Electric. And most of the physical sciences stuff really interfaced to Microelectronics. Well, there were some other interfaces. For instance, on fiber. We certainly were very much involved in helping the fiber business unit. Kumar led that charge during his period of time. He very much got involved in the relationship with Atlanta, a fiber factory down there. That relationship improved a lot. He did a lot for them over the years.
I think the other thing that we had a problem with in that whole period of time was there was an enormous effort in 3-5 semiconductors. And you might ask, “Why?” They were good research projects. Right? There was a lot of good research in those days in the 3-5, and there still is an enormous amount of research in the 3-5s. But from the point of view of the company, the 3-5 business was a tiny business; it was maybe $50-million a year or something like that. It was really small. So we had to try to get that contained, too. And there were efforts at Holmdel. There was a fairly large effort at Murray Hill. Then, there was another effort out in Pennsylvania in Branigeville. So one of our challenges was to get that under control and not have duplicative efforts all over the place. We gradually did that. We put all the optics work, eventually, under Alistair Glass and got the thing so it was confined and controlled, and we understood what we were doing instead of having pockets here and there and everywhere.
So it was just a lot of that sort of thing, which, you know, in the old days, letting us run free was okay because nobody was questioning us, what we were doing. And a lot of very good research was being done. But when all of a sudden we were being forced to really account for what we were doing, we had to get this stuff straightened out.
During that time, there was always one laboratory, which was the physical sciences laboratory, that was the oldest single laboratory of 100-some people that was part of the organization. That lab, it had John Bardeen and Shockley and other famous scientists in it. Even the information theory Claude, Shannon, was in that laboratory back in the old days. It was really the most famous laboratory. So I always tried to keep that laboratory as a basic research lab. We even created a small neuroscience group which became well know.
Was that the sea slugs research?
Yeah, the sea slugs research got done in the neuroscience department. The way this went was back in the ’50s and ’60s, a guy named Bob Schulman who was a very famous guy in the biophysics world. And he was an NMR guy. He did a lot of research in NMR, and he was interested in hemoglobin and oxygenation of hemoglobin and how that worked and did a lot of NMR experiments. And so he very quietly built up a group back in the ’70s to do that kind of stuff.
But then in the ’80s, it became obvious to me that that didn’t make sense for AT&T to have just a biophysics group doing that kind of thing. And biophysics, of course, in this stage— and biology was making a big change going into all the DNA research, and neuroscience was coming up with important things. So we said, “Okay. This is enough of this nonsense. We’re going to do neuroscience if we’re going to do anything. We’re going to justify it on the basis of computation and its relation to computer science.” So that change was done in the early ’80s. That group was eventually headed up by David Tank, who is actually here at Princeton. They’ve done some pretty outstanding things. The most outstanding thing I think they did was when they actually discovered functional MRI, which if you read the literature, it’s just used everywhere. It was a beautiful discovery.
Was that done at Bell Labs?
Absolutely. It was done at Bell Labs. That was not done by David. It was done by Seji Ogawa who was in his group. But what happened is interesting. Seji had done fMRI on rats and showed good contrast, but nobody tried it on humans. So as soon David became department head, he immediately arranged for them to go out to a lab out in Minnesota where they had a seven-tesla imaging machine that you could stick your head in. They did the experiments, that showed that you could actually see the contrast that you see today in functional MRI, and that was a very important paper. So that’s my grand hope for one more Nobel Prize. [Laughter] Ogawa has gotten the Japan Prize, which is really a big prize. So maybe that’ll cut him out from the Nobel Prize, but I certainly think he deserves a Nobel Prize. And they sort of set it up, now, because they’ve given a Nobel Prize for MRI, and other imaging techniques. So it’s possible that they could give him one at this stage. Anyway, that all came about in the early ’90s. But that laboratory, we kept going. Horst Stormer was head of it for a while.
He got the Nobel for you.
Right. And Cherry Murray headed it up for a while before she left. She of course, then, took my job when I became Vice President of Research. But Arno and I, that’s one of the things that we had disagreed on, and that is that I thought I should keep that as a basic research lab and not let the applied stuff go that far. Arno would disagree with me on that. We had a lot of disagreement over that whole thing.
But you were able to keep the…
More or less. He campaigned on it all the time. Arno’s not the kind of guy who’s going to get slowed down because somebody disagrees with him. But so he campaigned on those guys a lot to do more applied things. In some sense, it worked in the sense that Dave Bishop who was in that laboratory, started doing more applied things. And we built this thing called the Lambda Router, which was way ahead of its time, it turned out. So what happened during that period of time as we got into ’95 when Lucent was created, then it really was a question of trying to do more and more for the business units. To keep our funding going, we really had to worry about that. So…
This was a continual trend that got—
Started in 1990, I would say.
It started, I guess you said, around ’89 when the business unit structure became more and more so?
More and more so. And especially once we became Lucent, then all of a sudden, “Whoa! Lucent’s a smaller company.” At the beginning Henry Schacht was very good in the sense that he said, “Look. I’m going to give you 1% of revenues for research.” That was great. Until they started breaking up Lucent; then Lucent revenues weren’t very good anymore.
Let’s back up a bit. During the period between ’89 and ’95, let’s focus there some more before we get to the Lucent era. One thing, as more pressure came from the business units, did this lead to decrease in budget or…?
Well, actually, in that period of time, I think our budget was pretty stable. But it was very clear that the people were expecting more of us as a function of time. We did not have a budget problem. In fact, I would not have said we had a budget problem until around 2000. Even as part of Lucent, we were not in that bad of shape, because in the early days, Lucent had a revenue of $36, $37 billion a year, so we were $350 million or something like that. So the money wasn’t the issue so much in those days as was just the fact that people were looking, and we were trying to figure out ways to help the business units. That was a very different attitude than what we took before. I spent all my time worrying about business units.
Did this lead to increased turnover of personnel in research?
I don’t think so. You know, it was interesting, because what happened is sometimes it was just different people. But a lot of people liked doing applied things. You know? [Laughs]
However, I was just wondering about turnover of … because there are some people who don’t like doing applied things. [Laughs]
That’s right. Some of those people left. But there was certainly no major exodus in that period of time. It was a different period of time. I mean, it was later when the crunch came after 2000.
Yeah. And we’ll get to that.
But you know, there were a lot of good things. We played major roles in some of the development in the last five years, from ’95 to 2000. You know, one of the really, really big things that came out of research was this thing called True Wave Fiber. I don’t know if you’ve ever run into that. What happened was in 1995, we introduced the first WDM system, Wavelength Division Multiplexing System, with light. And of course at that time, the amplifier became this erbium amplifier, and the erbium has a gain spectrum right in at the 1.5 micron region, right in the minimum of the loss of the fiber, so it was ideal. But what’s easy to adjust in a fiber is where the zero of dispersion is in frequency. Your first impulse, of course, is to put it right smack in the middle of this region. But it turns out that if you do that, four-way mixing is very easy because you can satisfy momentum and energy transfer conservation. So it turned out the best thing to do was to put it just below this region. I’ll always remember, Andy Chraplyry and Ken Walker, these guys had this idea. And Arno just said, “Patent it.” And most of us were sitting there, “Are you sure this is a patentable idea? It doesn’t sound like…” We patented it and it turned out that for the next several years, Lucent was able to sell this fiber with dispersion shifted into this region as a True Wave fiber. It was selling at twice the price of normal fiber. And of course, it was no harder to make. And in fact, it was such that eventually, Corning had come and cross-licensed with us on fiber technology. And they had not cross-licensed with anyone. They thought they were the supreme commanders of that field. But they cross-licensed, which was a major concession on their part. So we were very proud of that one.
But then, we also did a lot of other things, with the Microelectronics. And one of the major efforts on my part was to get a combined laser modulator all on one chip. When we started working on that, Hitachi was well ahead of us. But I’ll tell you, we put in a crash program. And the laser business of Microelectronics sold those—I mean, they made a mint off of these things at 2.5 gigahertz. That was a very major product for them. But we worked very hard with them to get that product into shape. That was a big accomplishment.
Then it was very strange. Actually, during that period of time, we also worked with Microelectronics in a different way. They were actually working with Nortel, even though they were part of Lucent. They were working with Nortel for them to build their transmission electronic boards with lasers, detectors and electronics. Nortel was doing ten gigabits, and they didn’t want to do a laser modulator device.
They wanted a lithium niobate modulator. And the trouble with lithium niobate modulators, you couldn’t make them reliably. They’re ferro-electric, so the surface tends to charge, and it’ll gradually hold the residual charge on the surface and then all the voltages go out of control. We worked for a year and found a means of passivating the surface so that that didn’t happen. And it was amazing. You know, now, they don’t sell any of these things anymore. But at the peak in 1999 or 2000, they sold a half million dollars worth of those things! So I was very proud of the things we accomplished with Microelectronics in those days. That was really good.
What’s interesting is when I hear you talking now about the late ’80s and ’90s, you’re talking about things flowing out of research directly into the business units, directly deriving revenue. Our discussion last time when we were talking before 1984, I didn’t hear you talk once of anything…
No. They didn’t do this sort of thing.
All right. That’s quite a change, isn’t it?
Yeah. The others did. I mean, I wasn’t involved. I mean, there were some… Frankly, the thing that I think the research area could be proud of in the ’70s was in fact fiber. I mean, we put Western Electric into the fiber business. But that wasn’t done by me. I wasn’t involved at all in that.
But other parts of Area 11 were.
Yeah. Well, that whole thing was basically created out of Area 11. By ’95, we were really working at trying to do the right thing for the company. I mean, the first WDM system, that eight-wavelength system that we put in in ’95, that was largely designed by our systems research people. It was funny, because it was done in an interesting way. It was mostly done with the research interacting with the AT&T Long Lines people. And then finally, Western Electric folks… Well, they weren’t called Western Electric.
No, they weren’t called Western.
We brought them in, and they made the thing.
Network Systems people.
Right. The Network Systems people. The problem we were trying to address is they wanted… The system that everybody had in the early ’90s was 2.5 gigabits; they wanted a ten gigabits or more system. What happened was it turned out that AT&T didn’t have very good fiber. They had a lot of poor-fiber in their system. It turned out that you could propagate eight wavelengths with 2.5 each, and that propagated better than trying to go to ten gigabits on a single wavelength. So that’s when we went to a WDM system and we managed to sell that to AT&T. And as far as I know, that was the very first of the WDM system. I mean, Ciena tries to claim that they were first out there in the market with WDM. It’s just not true. The trouble is we just sold it to AT&T. We didn’t sell it to anybody else—we were part of AT&T.
It was all inside.
It was all internal. Right. But anyway, so that was another project that we really went after very hard. Then during the last few years, we did a couple of other projects. In the later part, I don’t know, ’98, ’99, 2000, we were suffering from this fantastic job we did for Nortel. It seemed like with the electronics they’d gotten, Nortel had the gigabit business pretty much locked up, so we were trying to counter that. So we worked with the Network Systems folks to develop a product called Lambda Extreme. We did a lot of work to get that product out the door. That product is really a phenomenal product. You know, I think it’s capable of three terabits over a single fiber. It’s capable of running ten gigabits to something like 4,000 kilometers without regeneration. It’s a very wonderful product. But then we also built this thing called Lambda Router, which was an optical switch. It basically fell flat on its face. It was a beautiful piece of technology, but it was just way beyond anything that anybody needed and it just didn’t fly. But we put it all together. We essentially did it all in research, and it just did not fly.
Right. I remember all the publicity about it. It was ready to go out and see if it could fly. Circling back a little. In 1993, you mentioned there was a reorganization, and you ran Physics. It was Physical Sciences?
Well, there was a lot of shaking up. Kumar left. Well, I think Kumar made a couple of mistakes. He tried to create yet another 3-5 laboratory, and that just broke the back. Everybody said, “What in the world are you doing?” So when that was rejected, Kumar said he’s out of here. So he went down to California, and then that’s when all that stuff was put under me and I had to try to sort it out. That’s really what Arno had wanted me to do, to sort out the various pieces, get it all together. So Bob Dynes [?] left and went to California, too. Vinky Narayan a Murti didn’t come back from Sandia; he went out to California. So then we brought Rich Howard in to take over the Silicon Lab.
I mean, the silicon lab, I would claim that by 2000, 2001, the silicon lab was the best R&D lab for silicon technology in the world. We had just wonderful people. You know, we had this guy, Mark Pinto, heading it up. Mark is an absolutely outstanding guy. He’s now a Chief Technical Officer and Vice President of Display Business for Applied Materials. He just was one of the sharpest guys I’d ever run into and did a phenomenal job of getting good people into the lab and handling them well. But when Microelectronics spun out as Agere, they clearly didn’t have enough business to have their own labs even. And as far as I can see, they just keep going down and down.
I haven’t paid too much attention to them since then.
So they were saddled by Lucent when they went out, with a fair amount of debt, and I think that hurt them a lot. But anyway, those guys have all gone to the wind. I mean, they’re all over the country now and working for all different firms. But they’ve all landed on their feet, as far as I can tell, doing pretty well. In fact, very well, I would say. [Laughs] So anyway, that was another thing, I really hated to see the demise of that lab. But so what can you do? And then of course, Microelectronics took all the optics stuff, and so the amount of 3-5 Semiconductor stuff, there was no need for us to keep very much of that anymore either.
All right. So now you’re talking about around 2000?
Around 2000 when—Let’s see. The first thing that happened was that McGinn decided to sell off the PBX business. That’s Avaya. I was immediately opposed to that because I realized that we’re starting to get too small. Right? [Laughs] Things are going to get tough for research. And McGinn even knew that because he said, “Well, why don’t you guys figure out some other way to get funded?” Forget it, right? So that was the beginning, as far as I was concerned, of the end when we got rid of the PBX business. And now, of course, they regret having done that because they would like to have it back so they would have an entry into the enterprise business. Even worse yet was they got rid of Agere, and once that was over, so much of the physical science was irrelevant to Lucent from then on. So those two moves, that was enough to break the back, and I wasn’t going to stay around a heck of a lot longer after that.
I was wondering if I could back up again perhaps to ’95. Do you recall your reaction on the announcement that the Equipment business and the long-distance businesses would become separate companies?
Well, I think two things. One of them is we all thought—we were all worried about this base issue, because we needed a large enough corporation. So this was another step in the wrong direction from that point of view. At the same time, our customer, basically, was Western Electric, or what became Lucent. Even though we tried to figure out ways to do things with AT&T, it just isn’t that easy for our research organization to interface to a basically service organization. And for sure, that service organization did have some software groups, but basically they just wrote standard software. So for us, it wasn’t easy to interface to the AT&T Long Lines anyway. So it didn’t bother us, I think, so much that that was the direction it was going to go. As long as Lucent looked like it was going to be pretty big, and it did look like it was going to be—actually, everything was blooming in those days. So I don’t think that was a negative. What really sent me to—you know, my view is it was over when Microelectronics went out. I said we can’t sustain the part of research that I was most interested in, so it was only a question of time.
If I can pursue that a little, did all of Area 11 go to Lucent? Or did some people…?
No, no. Some of them—that was another big issue. When Lucent and AT&T split up, there was a big push to separate, to create the AT&T Labs. You see, from my point of view, that didn’t affect me very much because AT&T Labs only wanted the software guys and the systems people. So they were not interested very much in the kind of people I was managing at the time, which was physical science. They, in fact, didn’t want any physical sciences. They took a few people in the optical communication business, but that was it. So the battle there between Arun Netravali and Sandy Frazier, who headed those two organizations, was all in the systems area—computer science, mathematics, and all that kind of stuff, speech.
Yes. Where I heard it particularly was in the mathematics group.
Oh, yes. Absolutely.
I heard they were fighting over the mathematics books in the library one at a time. [Laughs]
Oh, yes. That was a pretty bloody deal. First of all, Arun and Sandy never got along in the first place. And then to have to do this type of negotiation, it was just too—Every now and then, I would end up being the messenger—talk to Sandy what he wanted and then go talk to Arun about what he wanted. I tried to make some peace and get something done. [Laughs] It was a mess. But it wasn’t that we were threatened at that stage. We knew we had to be more applied and make ourselves more useful to the company and that sort of thing, but nobody was threatening our budget or anything like that. That didn’t happen until the late ’90s.
One thing that happened with the establishment of Lucent is that Lucent made its corporate headquarters in Murrary Hill.
Yeah, well, that was always an interesting one, right?
I always thought so. I mean, how did it change things having all of these corporate business types, not just interfacing, but in the building?
Well, they sort of all moved into the new building, which goes right down the center of the place. So they were kind of right in the middle between the two types of research: the physical sciences were in building one, and the rest of research over on the other side. So it was a kind of strange situation to have them there. But at the same time, those areas had been occupied by development organizations in previous history. So it wasn’t like they took those away from research to any extent. It wasn’t that at all. So we didn’t have that problem. It’s just that it was a different set of people than what we had before sharing our place. But they of course built a very fancy place for the higher ups. They didn’t like the—you know, there was always this fancy area where Bell Labs executives used to sit back in the very old days of AT&T. But that wasn’t good enough for the new breed, so they built an all-new complex for them. [Laughs]
Did having the business people on site change the nature or frequency of the interactions?
I don’t know if it did or not. That’s hard for me to say. I would have said that—I don’t think so. You know, the business unit people, when we became Lucent, the business units folks were much more interested in us than the AT&T folks were. The AT&T folks, the top management, mostly were Long Lines people, and those guys just didn’t have any interest in what’s going on in research. But the Lucent folks definitely did. And Henry [Schacht] was very much—Henry himself has always sort of had this kind of scholarly interest. I mean, he’s been on the Board of Yale for a long time, things like that. So he was interested in the kinds of things we did, and that made a difference. But the business people we dealt with weren’t necessarily those very top people. They were the business units—like the optical communications business was at Holmdel. The Microelectronics folks were all out at Allentown. The fiber guys were in Atlanta. A lot of the Network Systems guys were up in Merrimack Valley. So the presence of these guys was not that big a perturbation, I would have said. Except, they fixed-up a few things. They made Murray Hill look a little better. [Laughs] That’s pretty much the way it was. But finally when 2001 came along when things were really, really bad, McGinn got fired a year before that in the middle of 2000, and Henry Schacht came back in and took over again. And his first problem was that he had to just cut and burn.
The company, at this point, had gone very quickly from being growing and enormously profitable to really down.
Yeah. I admire him in the sense that he managed not to go into bankruptcy. But he sold everything off that he could. He even sold off the venture group, it’s interesting how that’s worked out. There was this venture group. Steve Socoloff is the guy who’s the head of it now. But Lucent did an interesting thing. When we first created Lucent, they created this venture group whose job was to look around the company and find what we called orphan technologies that might make a good venture. And over a period of five years, they created something like 20 of these ventures. And then what happened was Lucent was in deep trouble, and the people involved, went out and got bank loans. So they bought the business from Lucent.
Including the rights to these technologies.
Right. All these things that were in the ventures, whatever venture money and whatever interest and any hold these venture companies that Lucent had, they bought all that. So they managed it. And I’ve talked to Steve recently, they have done very, very well. And this concept of having a venture group associated with your company, to pick off orphan technologies, has been accepted by other companies. They now have several major corporations that they work with to do exactly what they were doing for Lucent. Now, Lucent doesn’t have them doing that anymore, but they’re doing it for, British Telecom and several other companies. And they’re doing it very successfully, as far as I can see. Some of the things that we spun out have been successful. So it’s good, right? You know, so that was interesting. But Lucent didn’t make the money off of it.
Yeah, because they had to sell it.
They sold it.
Well, basically, as you pointed out, they had to sell off all these things just…
To keep from going broke.
So the short-term exigencies trumped over what would have been long-term beneficial.
Right. So then what happened is by 2001, things were desperate. Henry started dolling out budgets that were huge reductions. So at the time, I was totally naïve. I thought, “Well, okay. I’m going to take this hit seriously and really try to reduce the research area in size, get rid of lots of people. And hopefully, that’ll do the job.” Right? Well, that was a pipe dream. There was just no way. So right before I left, I had a workforce reduction and buyout plan and all that sort of thing. We took out, I think, 400 people out of 1200 or something like that in research and brought it down to about 700 people or somewhere in there. And it turned out that wasn’t nearly enough. But I thought maybe I would help the guy that was going to follow me by doing it before I left. But it didn’t work that way.
But the problem was an even greater cut through there.
Oh, yes, and it was even much bigger cuts.
Given the exigency that you had to make a cut in just the magnitude that you made, how did you decide what and who to cut?
Well, there were various programs that we definitely cut. We had a small display program. We cut that. You know, it was those kinds of things. There were a bunch of those kinds of things we just cut and said, “That’s it, folks,” you know, “find yourself another job in Lucent or you’re out.” Then we looked at the really researchy part of research and cut a bunch of people there, forced a number of people that were close to retirement to retire, and all of those things. We used about everything you could think of to get rid of people. But primarily you looked to see how relevant they were. For instance, our optical communications folks, you know, the guys in Systems Research, we didn't touch them. We weren’t about to touch them, right? And a lot of the fiber guys, we wouldn’t touch them. But then what happened, they were sold, too. So see, that was another problem, right. We sold off the fiber people, the fiber business, and we sent, just like we did with Microelectronics. We sent another 50-some people with the fiber business, because there was no sense in keeping them in Lucent. They were doing fiber research. All of that went out. So that got us down quite a ways, but then we had to do another few hands-on, 200 or something. I don’t remember the numbers anymore. But that was a very tough time.
Yes. But were people also sent off with the PBX business with Avaya?
Yeah, there were a few, but there wasn’t a very big list.
So there weren’t too many. But the R & D people over at Avaya were much more development types?
Yes. There was a group of people, Ravi Sethi heads that group to this day. And as far as I could see, Avaya is just doing okay. I mean it’s not growing or doing anything very much, but it’s doing okay. It’s about half the size of Lucent, I think. It’s about a four-billion-dollar-a-year company. And of course, that’s the trouble. All the companies, I mean Avaya once was an eight or nine billion dollar a year. And Network Systems before it was Lucent, was a hell of a lot bigger than that. They must have been $20-something billion, and now it’s a little over…$2.1 billion a quarter, right. So it’s just not very big. You know.
And so that’s really the story. It was, and I always felt that things didn't really go bad until the last part of the nineties, as far as research was concerned. That’s when things started going…
And it is basically the same time as when Lucent’s business started going down.
Basically. Well, when they started selling things off and then for sure when the business went sour, it was all over. But I thought that making research more applied was something that was sort of characteristic of the time as much as anything.
But was not just something going on at Lucent and Bell Labs. It was something that you saw with your peers at industrial labs elsewhere.
That’s right. Certainly, IBM was ahead of us in becoming more applied.
To go back a little bit, their bad patch was at the beginning of the nineties.
That’s right. They really got in trouble in the early nineties, and of course, it’s interesting as to what happened to them. Of course, they got saved—first, because Gerstner was not willing to break the company up. But second of all, they got saved by the fact that they created a service business. That servicing business is now what, 70 percent of what the IBM is—it’s a huge fraction of IBM.
Yeah. That was the real key to Gerstner’s success, I think, figuring out where there was a real growth opportunity.
Right. And they grew very rapidly, in that whole area when they did it. And it was really quite an impressive thing. I think what’s happening to IBM today is they’re having, they’re kind of stalled, because people just don’t seem to see this service business as a great business to be in, as far as I can tell, anyway. So IBM stock is not doing well at all, in the past year. Anyway, so I don’t know what else to say, here. I think we’ve just about covered that era.
Yes, but I still have questions. During that period between ’95 and ’99 or so, when Lucent was going great guns, did budgets grow or get looser?
That was the period of time when Henry had made his commitment to be one percent of revenue and Lucent was growing.
And revenue was growing well.
Revenue was growing absolutely, so we were doing fine. So the budget wasn’t really an issue, and I also was able to get money, the business units often supported us for a lot of things we did, too, and so we got a fair bit of money from the business units themselves. So we were not, I don’t remember being really hurt for cash in those days. You know, you are always fighting for money.
Well, sure. But if you’re fighting for money in a growing pool, it’s a different thing than…
Yes. It’s a lot different than when you’re getting cut by enormous number. I mean, it’s just, and the fact that it was just broken up, that was probably some of the saddest part.
When Lucent broke itself up and spun those off.
When Lucent spun off the fiber business, spun off Microelectronics, spun off Avaya. I mean you’re really breaking the thing down into small pieces now.
It’s a smaller business, and therefore it’s more narrowly focused business.
And Lucent has a real problem today. You ask yourself, “Who are the customers?” There’s only a handful of customers and that makes for a difficult market.
And it’s really a tough business to be in when you only have a handful of customers. There are a lot more suppliers out there. So it’s tricky. I just don’t like where they ended up.
I don’t think anyone does. The last position you held was Vice President for Research?
Right, for about a year, a year and a half maybe. Let’s see, yes, that was beginning around January of 2000, somewhere in there, until I retired in September of 2001, I guess. A year and a half. It wasn’t very long. It was interesting. I enjoyed that year and a half in the sense that I learned an awful lot about the systems type work, the software things and that sort of thing. So I got familiar with the rest of research. That was a good time from that point of view. Research, it was interesting to me because those people were supposed to be involved in routers and the development of routers. We were singularly unsuccessful in that whole effort. I’m not sure I know why, but my impression is that we never really figured out how to work with the business unit in a way that we could start a new business in the router business and get it off the ground in the proper fashion, from a business point of view. We did a lot of development work on various types of things in that era having to do with routers and soft switches, stuff like that, but none of it came to fruition.
Yes, there’s an area that Cisco came to dominate.
Oh yes, and Cisco was already dominant at that stage. In some sense, we did some pretty good jobs on the development side, and we researched and worked very hard on these things. But I don’t think we ever really thought through the business case properly. Or not just the business case, but how to organize so that we were ready to sell in a way that made sense, right? I just don’t think we were ever really in tune with that and knew how to enter the business. That’s not surprising, that guys didn’t know how to do that, but somebody should have been smarter and organize it a little differently. That was my biggest disappointment as Vice President of Research. These big projects, we had several big projects going on while I was there, and they just didn’t go anywhere.
I know this has become a very important area recently, was there also a major effort in the wireless business?
Well, we did something with the wireless business. Some things were successful with the wireless business. That was a better situation. We did a nice job on some software. There was a big project, and actually it worked pretty well. One of the things, it turns out, that when you put in base stations, one of the issues is how do you optimize the positioning and the power distribution relative to each base station so you can have an optimal coverage of the area. We developed a software program that could do that for you. You know, you gave it the maps of the area and all the information about buildings and all that kind of stuff, and you located these things, and it would tell you basically a lot about how to optimize the network. So this saves a lot of money, because the alternative was driving around trucks and testing and then varying the powers and that sort of thing on various stations and trying to make it better. That saved one heck of a lot of money. That was a major project between us and the wireless business that I thought was quite successful.
But we did a lot of other things. Of all things, we got involved in antennas and stuff like that for wireless base stations. We actually designed and built a bunch of antennas: more compact, simpler antennas. And filters. We had these materials people doing this. They were good at that kind of stuff, so we did it. But there was a fairly large effort in research trying to support the wireless organization. That went okay, I think.
But wireless is a funny business. It’s not an obvious business that you’re going to find a major breakthrough in, because it’s well established. It’s a very complex technology. There are a lot of pieces to it. So you add little pieces at a time. We did a fair number of those kinds of things.
But I would say that that was a good effort, but I would not claim that we did a very good job in helping the switching organization. When we were just simply trying to support Network Systems, except for the optimal thing where we clearly did a lot of work, I didn’t think that we did a fantastic job. We met with the switching guys. You know, we had a hard time figuring out what to do for switching folks. They had line card problems. We used to go there and try to help them reduce the cost in line cards. I’ll always remember that. They made a big deal out of it. They were pushing us, then it turned out that they finally did a survey to see how much their competition was paying for components compared to what they were paying for components. It turns out they had contracts in which they were just paying more for components. So that’s really the story. That was an interesting life.
A couple of questions. Now, you talked about the downsizing, a lot of people left. What sort of place did these people tend to end up? At universities and other industrial research labs?
Oh, yeah. Well, everywhere. Some of them are out in ventures. Some of them went off to universities. Some of them went off, like this friend of mine who’s now Chief Technical Officer at Applied Materials. There’s Cherry Murray who is Deputy Director of Livermore National Laboratory. They’ve gone everywhere. I mean, they really are everywhere. But as far as I can see, the interesting thing is every one of them seems to be quite successful. I mean, they’ve done well.
In thinking back over conversations, you talked about how similar the research environment was to a university, in that that it wasn’t a matter of choosing an industrial lab versus a university lab when you set out. Could one say that was no longer the case by the time you left?
It was quite by then like a University. Even to this day, there’s a small group that’s doing basic research. But they’re now forcing that group to try to go out and get outside grants. So all of that has changed. I think it’s really, very different—nothing to do with what went on at Bell Labs in the 70s and 60s. It just isn’t that kind of place.
Do you think that’s generally true of industrial research?
Well, you should ask the IBM what they think. The one place that’s left, as far as I can see, that’s a big research organization. But if you go there and you talk to people, the vast majority of their effort is applied, and they have their research organizations very closely associated with their business units. So they’ve done the same kind of thing. The only difference is they’ve held together and their base for funding has held together.
Yes, they’re still working off a very large financial base.
It sure does. So you concluded it was time for you to retire?
I did. Well, a couple of things happened. First of all, my wife died in the middle of 2000. And I was not happy. Things were clearly not going the right direction, and I was going to become President of the American Physical Society, so I just decided the heck with it. I’ll retire and do that job and come down here if I could. I thought about going to either Penn or here, and I decided to come here because I knew more people. Then, of course, I had to negotiate a deal with that department to come do this. But they’ve been very good to me. They’ve let me be here. You know, you can’t expect somebody, when you’re 63–64 years old, to offer tenure. I personally believe they would be nuts if they did it. But they’ve set up the position that allows me to be here and they pay me a little bit. It’s worked out pretty well.
What are your activities here? Are you working with students, doing your own research, or?
Well, I’ve done some of my own research. I’ve written a couple papers since I’ve been down here. I’ve got a senior thesis—all the students here have to write a senior thesis. We’re just about to finish up the senior thesis for one of the students. I’ve taught a couple courses. They’ve been involved in trying to help do some recruiting. I think I helped get a young guy here this year in experimental physics. I think we’re on the right track here in our condensed matter physics.