In a recent article in New York Times, Judy Estrin warns about current lack of long term government and private funding for groundbreaking technologies that could build foundation for future products and services. Estrin is a former CTO of Cisco and a serial entrepreneur, so her words have serious weight behind them.

In my opinion, there is no such problem. The real trend here is that the innovation is shifting from scientific findings and core technologies towards applications, design and user experiences. In many areas, the core technology is just good enough as it is, enabling ever increasing opportunities for new uses and applications. The last years have seen tremendous innovation in social web and mobile applications, as well as completely new generation of productivity tools that leverage ubiquitous broadband and mobile access to the web.

The rise and growth of companies in the markets of social networking, blogging, instant messaging, mobile and web recording, streaming and document sharing are good examples of the shift of innovation from core technology to the application of technology. Due to the maturity and commoditization of the core tech, applications are relatively cheap to develop and launch. This lowered barrier of entry has led to unprecedented shifts in market forces in multiple markets, including communication, media and enterprise applications.

Obviously, there are still many areas of technology that are currently in fundamental breakthrough phase, for example green/clean tech, renewable energy and bio/nanotechnology. These areas require significant investment to basic research as well as applied research and product innovation.

For savvy entrepreneur, taking the application route is much safer bet, but has also very short windows of opportunity due to low competitive barriers. I have personally been entrepreneur in enterprise applications, nanotech, mobile and web applications businesses, and my first hand experience tells clearly that breakthrough technology takes much longer to develop into products than application of existing tech to innovative feature applications.

If you are ready and willing to put 5-10 years of your lifetime to try to build significant breakthrough technology, and you have access to major funding sources, trying to reduce science to commercial technology is the right type of venture for you. Otherwise, try to do quick, iterative innovation in the application space, and never invest too much for the first try.