From Bang to Net

How Arno Penzias, who won the Nobel Prize for confirming the universe started with a Big Bang, turned his back on pure science and became an investment banker for Silicon Valley

"I took a summer, and during that summer, I finally realized that everyone has more freedom than they think they do. And I always say that to people, and I realized that I had freedom to change, and to change myself, and also change the people around me. And so I decided in the late '80s that Bell Labs is better off not trying to be different on the inside and outside."

If downsizing Bell Labs was an anguished proposition for Penzias, it was not exactly pleasant for underlings, either. Penzias had the habit of coming to staff meetings and making a rash statement sure to offend the sensibilities of all present. The rest of the meeting, participants recall, would then be spent in loud arguments between Penzias and his directors.

In the trenches, the result of this dissonance was a sort of panicked drift, researchers recall.

Penzias' former research partner, Robert Wilson, who had become director of the 16-member radio physics research department, recalls searching for useful projects to keep his scientists busy under the new regime. For a time, they worked on a new type of price tag for stores, in which grocers could change shelf prices by using computer commands that would be transmitted through tiny radio antennas. Another project: increase the reach of AT&T's line of cordless phones.

By 1995, AT&T had sufficiently integrated Bell Telephone Laboratories into the rest of the company to calculate that it had lost the company $853 million (on $21.4 billion in revenue) during that year.

Layoffs at the Labs came in waves, culminating in widely publicized firings that gave the boot to 160 Bell Labs workers and severance packages to another 400 during 1996. That year, AT&T spun Bell Labs off into Lucent Technologies, an independent company dedicated to making switching and other equipment. The spinoff involved firing 70 of Bell Labs' remaining 590 physical scientists.

Executives now at Lucent credit Penzias with taking the steps necessary to prepare Bell Labs for its successful transformation into Lucent.

But business is business. As a prelude to the split, AT&T pushed aside Arno Penzias, replacing him with Arun Netravali, a 24-year Bell Labs veteran who is a specialist in video compression -- an eminently practical field.

Penzias was eased into the largely symbolic post of chief scientist of Bell Labs, speaking on behalf of Lucent at trade conferences and moving out to San Francisco with the expressed purpose of scouting Silicon Valley ventures for Lucent to finance.

This May, he retired from Lucent. After 37 years benefiting from, then building upon, then tearing down the tradition of basic research at Bell Labs, Arno Penzias has been cast aside. His eulogies at Lucent have been loud and numerous. The company's Web site features a nine-page profile of Penzias, a three-page chronicle of his scientific career, and a single-page commemorative marking Penzias' removal as the Labs' chief.

The greatest accomplishment of Penzias' career, the Lucent flackery says, was to "structure the realignment of Bell Labs Research from a vertically integrated structure based on classic academic disciplines to a structure that focuses on strategic emerging technologies."

Translation: Hail Arno Penzias, who turned Bell Labs from a temple of science into just another corporate R&D lab.

Without Penzias at its helm, Bell Labs has done rather well, despite the hand-wringing that accompanied its spinoff. Lucent makes advanced electronic equipment, and does not provide long-distance service. "Lucent is an equipment company, and that makes a huge difference," says Bill Brinkman, director of Lucent's Physical Sciences Research Division. "When we were part of AT&T, the hardware side of the house was the small side of the corporation. So people would say, 'Why are we using this money to support the small side of the company?' "

Basic research is growing now, which has been great for morale, Brinkman says.

Bob Wilson, Penzias' research partner, is doing well, after a frustrating end to his career at Bell Labs. Distraught by a supervisor with a penchant for micromanagement, Wilson quit Bell Labs two years ago to become a researcher at the Harvard Smithsonian Center for Astrophysics. He is helping supervise the construction of an array of telescopes able to detect radio waves with a wavelength smaller than 1 millimeter -- a sensitivity that could be key to solving some of the remaining riddles about how stars and planets form.

Penzias announced his retirement two months ago, but he really isn't retired. In June he was the keynote speaker at the Supercom networking conference in Atlanta. His latest book, Digital Harmony, "explores how emerging technologies will change the way people work and live," as books with that sort of title tend to.

His new job as an adviser to New Enterprise Associates, the Menlo Park venture capital firm, has helped him shape his ideas for a new role as futurist to the techno set, he said during a recent interview.

"I work through a public speaking agency -- they're the same people that have Art Buchwald, military generals you've heard of, futurists, that sort of thing. I'm on this panel of technology speakers," Penzias explains.

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