IBM To Open Research Lab In Brazil

June 9th Wall Street Journal

By SPENCER E. ANTE And NATHAN BECKER

In a move that underscores the growing importance of emerging markets and the globalization of innovation, International Business Machines Corp. said it will open a research laboratory in Brazil with the cooperation of the country's government.

The lab, which will help IBM to develop technology systems around natural resource development and large-scale events such as the Olympics, is IBM's ninth research lab and the first in South America. It's also the first new IBM research lab in 12 years.

"We are very excited about Latin America and Brazil in particular," said Robert Morris, vice president of services research at IBM. "Some of the pressing problems around sustainability are present in Brazil."

Currently, IBM says it has a handful of researchers at existing IBM locations in São Paulo and Rio de Janeiro. Over the next few years, the lab will hire more than 100 researchers, who will join the about 3,000 who already work in the technology giant's other research labs. Mr. Morris said IBM would recruit workers with doctorates in computer science, math and physics from both Brazil and other regions.

IBM Brazil general manager Ricardo Pelegrini said the company chose Brazil for the newest research lab because of the "big growth opportunity we have seen here." In the first quarter of 2010, Brazil's gross domestic product expanded 9 percent from a year earlier, faster than any other Latin American economy. Brazil is the second-fastest growing economy among the BRIC countries, behind China, which expanded 11.9 percent in the first quarter, and ahead of India and Russia.

A key IBM focus is selling technology and services to large fast-growing emerging nations such as Brazil, and in smaller markets such as Vietnam, Czech Republic, and Argentina. By 2015, IBM expects to generate 25% of its revenue from those emerging markets, up from 19% last year.
"IBM is aiming to establish a network in the Southern hemisphere," said João Ferraz, managing director at Brazilian Development Bank. "We will help them to set foot in the region."

The Brazil lab also highlights IBM's desire to create a global innovation network. In Brazil, IBM sees opportunities to develop technologies that will help Brazil to safely extract its huge stocks of oil, gas, water and other natural resources. And with Brazil hosting the World Cup in 2014 and the Summer Olympics in 2016, IBM says those events will help the company to develop software systems that help companies and governments to manage large clusters of people. Social networking tools that work on mobile devices, for instance, could help the government to ease traffic congestion.

"If we invent things for natural resource management, we will quickly export that to China and India," said Mr. Morris. "The work we do in Brazil will export innovation into other countries."