Australia needs a digital tag line and identity such as Silicon Alley in New York if it is to become a net importer of information technology 'brains'.
Speaking at The National Press Club, Scott McNealy, chairman and chief executive officer of Sun Microsystems, said a media centre for excellence would be a good idea to set up due to the number of "very interesting media companies in Australia".
"Australia could become planetary experts in digital media."
McNealy said the challenge to Australia is that it is an island, but the country has clear opportunities with the Internet.
"In the old days to get raw material here, the cost of freight was very high. But with intellectual property it is easy to zap ideas across the world," McNealy said.
"Dislocation is not a huge disadvantage. Australia should be a net importer of brains. We [the US] should be the ones with a brain drain. If half my engineers knew about Sydney, San Francisco without traffic, they'd all move here!"
McNealy believes the main challenge to Australia getting ahead is that companies need clear tax breaks to attract "software folk", and the industry needs to look at the percentage spent on research and development.
"The Internet is under hyped; companies in Australia should stop doing mainframes and Windows and start doing Internet."
McNealy said the company will be increasing investment in the Asia-Pacific region through the Sun Asia Pacific Venture Investment Program, to help keep "bright people in Australia".
The company expects the program to provide $US250 million in investment capital for the region from local partners, with Sun contributing $US50 million.
The investments will focus on Internet, communications and e-commerce enabling technologies.