This report presents a case for innovation in the computer industry in
South Africa. The case is based on the argument that innovation happens 
anyway, to cover technology transitions, and the investment is 
subsequently wasted, when imported solutions become available. Instead of 
seeing innovation as a burden, South African industry should see it as an 
investment. If innovation is seen as a burden, there is a case for ceasing 
all expenditure on local capacity-building, as importing foreign skills 
may well be cheaper. However, it is pointed out that innovation actually 
represents an area of comparative advantage in South Africa (as opposed to 
the conventional view that we should compete on the basis of cheap labour, 
which is easily shown to be problematic in view of the massive pool of 
cheap labour in sweatshop economies. The report proposes a series of 
surveys to gauge industry's attitudes to innovation, and the problems with 
existing capacity, especially the higher education sector, to be followed 
by a summit at which government, industry and education leaders should 
establish a joint strategy. This strategy should aim to fix current 
problems as well as to pull together a wide variety of uncoordinated 
strategies in this field.