Greater Boston remains a center of technological innovation and excellence, despite emerging competition. While regions throughout the US and the world are racing to develop the kind of capacity for technological innovation and the highly qualified workforce that characterizes Greater Boston today, Metro Boston retains the competitive edge in most technological sectors, and is seen as second only to regions of California—from Silicon Valley to San Diego—in most cases. However, as India develops its software capacity and China moves to the front in high-tech manufacturing, businesses and jobs that once seemed "destined" to remain in Boston are increasingly vulnerable not only to competition from regions in the other "Leading Technology States" (California, Connecticut, Illinois, Minnesota, New York, New Jersey, North Carolina, Pennsylvania, and Virginia), but other regions around the globe.

Greater Boston’s IT industry has not fully recovered from the 2001 recession. According to a 2006 study from the University of Illinois Center for Urban Economic Development, the Boston Metro Division lost 29% of its IT industry jobs (17,500 jobs) from 2001 to 2004. Of 8 major US IT centers, Boston and Los Angeles were the only two that continued to lose jobs during 2003/2004, but Boston did gain 2,000 jobs (4.7%) during 2004/2005. Employment continued to fall during 2005 in 6 of 10 Innovation Economy clusters monitored by the Massachusetts Technology Collaborative.There is evidence of a turn around in Scientific, Technical, and Management Services (a 5.4% increase), the Software and Communication Services sector (a 1.9% increase), and Business Services (up 1.5%). Only Post-Secondary Education and Scientific, Technical, and Management Services had higher employment in 2005 than in 2001.

Massachusetts’ lead in patents per capita is threatened. According to Massachusetts Technology Collaborative  data, Massachusetts led the nation in the number of patents per capita from 2000 to 2004, but Massachusetts’ patents per capita fell 7% from 2003 to 2004 and 15% from 2004 to 2005, falling behind California in 2005.

Combined, the three life-science/health areas now make up 33% of venture capital investments in Massachusetts. Biotechnology firms received the most venture capital funds in 2003 and 2004, but with 25% of venture capital funds, software firms regained its #1 position in 2005. From 2001 to 2005, biotechnology increased from 10% to 23% of venture capital investments and medical devices increased from 4% to 8%. Retailing and distribution dropped from 11% to 1%, networking dropped from 18% to 5% (See Indicator 9.1.1).

Boston, Massachusetts, and the United States are lagging in the race toward broadband and wireless access. The United States is losing its place as a leader in access to the Internet. From 2001 to June, 2006, among the 30 OECD countries, the United States fell from having the 4^th highest percent of broadband subscribers to 12^th. During this same period, the United Kingdom went from 21^st to 10^th. According to jiwire.com, the United Kingdom is also the leader in the proportion of Wi-Fi hotspots. The US ranks 10^th in hotspots, with Massachusetts 17^th among the States and Boston lagging competitor cities such as San Francisco, Seattle, Austin and Washington.

Massachusetts continues to lag other stats in the number of students interested in technology related degrees. According to the Massachusetts Technology Collaborative, the percent of Massachusetts high school seniors taking the SAT and planning to major in computer, engineering or information science increased from 11% to 14% from 2001 to 2005. Despite this increase, Massachusetts lags the national rate (17%) and is tied for seventh with New Jersey and Connecticut among 10 Leading Technology States.

Throughout the decade, Greater Boston has remained the 3^rd most popular destination for foreign students. International students represent a major source of new talent for Massachusetts’ high technology economy. The US tightened student visa procedures after 9/11, leading to the first drop in the number of foreign students in the US, decreasing 4% from 2002/2003 to 2005/2006. In the first sign of a turnaround the number of new international students, increased 8% from 2004/2005 to 2005/2006.

Massachusetts graduated 3% fewer engineering degrees in 2005 than in 2004, but 7% more than in 2001. On a per capita basis, Massachusetts has a significant advantage over other leading technology states, with 76 engineering degrees awarded per 100,000 residents, compared to 51 in Virginia.

Local technological innovation is taking place in both traditional and emerging sectors including security, wireless, medical devices, bio-IT, embedded systems and nanotechnology. Greater Boston is home to local leaders in robotics, such as the Burlington-based  iRobot, and radio frequency identification (RFID), which was originally created by an MIT Professor and has been applied to recent innovations such as Fast Lane.

Technology is transforming teaching and learning. Local universities, such as the University of Massachusetts, are leaders in distance learning. MIT's free OpenCourseWare leading the way with over 1,500 available courses. In the Boston Public Schools, 100% of classrooms are connected to the internet, and it’s LINC III project aims to maintain its success in lowering the student to computer ration while introducing technology to schools that will improve curriculum development. (See Indicator 9.3)

The Mass Technology Leadership Council identified 2,665 companies with revenues of $10.5 billion in the state in its 2005-2006 Complete Guide to the Massachusetts Software Industry. The survey found that small, entrepreneurial software developers and distributors are major players in the state’s software industry. About 70% of the state software companies surveyed have 25 or fewer employees; 68% have $5 million or less in revenues; and 12% are owned by women or people of color, compared with 10% of companies surveyed with more than $50 million in annual sales.

Massachusetts is emerging as a leader in open source software development, which encourages improvements through the distribution of source codes outside of the licensing and distribution regulations that protect proprietary companies. Novell Inc. recently moved its corporate headquarters to Waltham from Provo, Utah; and the North Carolina-based Red Hat Inc. designated a site in Westford as a development hub, according to the Boston Globe in November 2004. The LinuxWorld Conference & Expo for the first time held its annual conference in Boston, at the Hynes Convention Center. This will be the third major IDG tech conference with an annual East Coast show in Boston, following the Bio-IT World Conference & Expo and Macworld Conference & Expo.

Community technology centers have grown over the past decade as critical providers of free or affordable access to computer-related technology. Boston has one of the most state-of-the art and well-distributed networks of community technology centers in the nation located in "Greater" Roxbury. These were established—and are endowed through the year 2019—by the Timothy Smith Fund administered by the City of Boston’s Trust Office. This initiative has created more than 40 community technology centers in Roxbury in partnership with local community-based organizations. The activities and programs of these centers are now coordinated by the Timothy Smith Network, which is also working with the National Science Foundation, MIT, Harvard University and Smithsonian Institute to teach science to students at all levels at various Timothy Smith Centers.

The Massachusetts STEM (Science, Technology, Engineering and Mathematics) Collaborative has grown from its first summit (2004) into a project housed at the University of Massachusetts that annually brings together K-12 superintendents, principals, teachers, representatives of local businesses and government, and higher education leaders to discuss the establishment of a STEM “pipeline” in Massachusetts schools. Through work at University of Massachusetts, the project’s website now provides links to 48 programs and organizations that provide resources for educators and serve as entry-points for local youth into the world of science and technology.

New forms of public participation and creative expression are being enabled through technology, including greater access to tools and content for art, film, video and self-publishing, as well as production and distribution processes.Through its website and its biannual conferences, Boston Cyberarts provides a platform for innovative artists and organizations to connect with each other and display their work, and the NewburyOpen.net Boston Music Project, sponsored by a group of wireless access businesses, provides a free distribution medium. Technology is enabling problem solving at the intersection of sectors, including the environment and health. Innovations in green building technologies, geothermal and smart building systems (see Environment) are creating healthier environments, and health care innovations, such as Electronic medical records (EMRs) and computerized drug order entry, are streamlining health care delivery. While the cost of high-tech health care must be balanced with proven low-cost approaches, such as diet and exercise, technology also facilitates public education about these choices and decisions.