In the old days most of the corporate research was in the physical sciences because the products, large "mainframe" computers and their peripherals, were very mechanical and cast in hardware. The advances of the next generation of product were driven by faster chips, more dense storage, printers that handled more complex print streams, faster networks, better user interfaces, etc.. Now that software and interoperability standards have eaten the world and made IT hardware a commodity, the competitive advantage rarely comes from physical science advancement. Relatively few companies now need physical hardware improvements to drive the next gen product. Intel, AMD, 3M, storage vendors, maybe a few more. The barriers to entry in a software world are so low that buying startups is more cost effective than investing in your own people. There's a survivors bias (I think,) in looking at what startups get acquired. For every one that gets acquired there are probably 10+ that don't. Why would a corporate CEO to invest in 11 research projects knowing only one might pan out if he could just wait and pick a winner from 100 startups?