Every so often, I wonder if Silicon Valley is all it's cracked up to be. Sure, the confluence of venture capital, universities, and lawyers make it a veritable petri dish for the formation of technology companies, but there are a lot of other great places for innovation, right?
Well, if you go strictly by market capitalization, and look at the top 10 information technology companies, 6 of them are based in Silicon Valley: Cisco Systems, Google, Intel, Hewlett-Packard, Apple, and Oracle. In fact, if you map these company's headquarters, they'd all be inside a circle with a radius of just 10 miles. Amazing, when you think about it.
And these companies are far from just "headquartered" in Silicon Valley.
Google and Apple are very much centralized from a product and technology development standpoint.
Intel has research-and-development facilities in Oregon, Arizona, and Israel, but a significant amount of its R&D occurs at or near its Santa Clara, Calif., headquarters. The same is true of Cisco, though the networking giant owns several large subsidiaries--such as Scientific Atlanta--that are based elsewhere. Likewise for Oracle.
HP is somewhat more diversified, with product development for its Compaq unit in Houston, plus R&D facilities in Idaho, Oregon, and additional cities around the globe. But still, more of its R&D occurs in northern California than anywhere else.
Three of the four companies not based in Silicon Valley have research and development consolidated near their corporate headquarters: Microsoft in Redmond, Wash.; Qualcomm in San Diego; and Nokia in Finland.
IBM, on the other hand, is the most distributed company of the 10, with R&D facilities in New York, Massachusetts, Vermont, North Carolina, Texas, Minnesota, and a number of international locations, including London.
What does all this mean? Well, the data's essentially useless, unless you compare these companies to the same group, say 5 or 10 years ago. Luckily, I've got a good memory. It's not necessarily obvious from the data, but there does appear to be a trend toward more distributed R&D among large companies--if not domestically, then certainly internationally.
Although there are a number of new and growing U.S. technology hubs, none appears to be in a position to unseat Silicon Valley as the tech mecca.
Internationally speaking, China, India, Israel, Japan, and the United Kingdom each have technology development centers with tremendous growth potential. South Korea and Taiwan are nothing to sneeze at, either. Sure, they all have a way to go to match the confluence of resources and talent that Northern California offers. But the trend is there.
And while our qualitative analysis consists only of 10 companies, I do believe that it represents the industry as a whole.
In summary, as information technology penetrates further into the lives of more and more people, it stands to reason that innovation hubs will become more and more geographically distributed, if not also technically specialized.
And someday, a new technology may take root and ultimately supplant electronics as the driver of human innovation. It might be a form of biotechnology, nanotechnology, or something else entirely. In that case, all bets are off.
Updated 5/29/08 12:23 PM - Modification to paragraph on Intel R&D.
Occam's Razor essentially says that all things being equal, the simplest solution is the best. The principle has implications in virtually every field of science, not to mention philosophy, aesthetics, marketing, business, you name it.
If for some reason you don't buy the word of a 14th-century Franciscan friar, it might interest you to know that Albert Einstein also believed the universe loves simplicity. I don't know about you, but I'm in no position to argue with that guy.
You'd think that keeping things simple would be the easiest path, but that's not necessarily the case. Sometimes it's downright impossible. Look at the personal computer, for example. The need for backwards compatibility with legacy programs and interfaces has forever rendered the PC more complex than any of us would like. ... Read more
Sometimes I'm so uninspired I can't come up with a decent blog post to save my life. When that happens, I turn to what comforts me: numbers. Yes, I know how weird that sounds. What can I say, I'm a geek.
Anyway, I just got to wondering how investors in various technology companies fared over the long haul. I was just as interested in how technology companies performed versus companies with a more traditional business model. ... Read more
Technology companies run into trouble from time to time. Today it's Yahoo, Dell , and Motorola. Tomorrow it could be Google, Cisco Systems, or Apple.
Lest we forget, it wasn't that long ago that Apple flat-lined for an entire decade before ousting Gil Amelio in favor of ex-chief Steve Jobs. Jobs restructured the company by first cutting Newton and other unprofitable products, then introducing exciting new core products like iMac, and finally branching out into consumer devices like iPod and iPhone.
But that's nothing new. It happens to most companies, sooner or later. ... Read more
How do we value technology companies? Ingenuity and invention, quality of service, brand loyalty, manufacturing muscle, operating efficiency, supply-chain management, price, great place to work. There are lots of metrics.
For those unfamiliar with the wily ways of Wall Street, the stock market has its own way of expressing what it thinks of companies. It's called market capitalization or market cap for short. ... Read more
It can happen at any time: market bubbles burst, companies crash and burn, investment portfolios become worthless overnight. The common denominator in these events is overconfidence, irrational exuberance, call it what you want, it all comes down to lots and lots of people taking risks they shouldn't take.
Why do we do this to ourselves, in spite of all logic to the contrary?
We even have age-old sayings we choose to ignore all the time: What goes up, must come down; the bigger they are, the harder they fall; don't put all your eggs in one basket. Jerry Garcia of The Grateful Dead sang, "'Cause when life looks like easy street there is danger at your door."
Do we listen? Nope. ... Read more
There are lots of things I don't understand. They make me crazy. But don't worry, it isn't contagious.
What I don't understand
How was Lou Gerstner able to reposition a zillion-year-old company like IBM from big iron to services, while Jerry Yang doesn't even know where to begin reinventing Yahoo!?
Why does my wife clean the house before the cleaning people come?
When you tell telemarketers you're not interested, why do they keep talking until you hang up on them?
Why do criminals go to all the trouble of robbing a bank or smuggling drugs and then get caught with the goods doing something stupid like speeding?
Last week my dog pissed on the couch; the same day the cat threw up in my slippers. Why do bad things happen in groups? Is there some unknown force of attraction between disastrous events? Where are the physicists on this? ... Read more
Yes, I know Yahoo rejected Microsoft's bid of $31 per share. But that's just standard negotiating strategy in the world of mergers and acquisitions.
Sure, Microsoft's offer - a 60% premium over the price of Yahoo's stock at the time - was designed, not only to get Yahoo's board's attention, but to back them into a corner. If no other suitors emerge - as I predicted in a prior post - it's an offer Yahoo's board can't refuse without risking shareholder litigation or revolt.
But that doesn't mean Microsoft didn't leave itself any wiggle room, and Yahoo's board knows that. They also know that this is Microsoft's big chance, perhaps its only chance, to jump to number 2 in internet search and advertising and challenge Google. That means Yahoo has some negotiating power. ... Read more
Microsoft's unexpected marriage proposal to Yahoo has been the talk of the high-tech town. Who would have thought a possible geek betrothal could rival the coverage of Angelina and Brad?
And even though Microsoft has yet to get an answer from its intended partner, I've got a pretty good idea how this deal's going to go down. Here's my take on the outcome with respect to all involved parties:
Microsoft
It sucks being No. 3 in every Internet business metric--search, advertising, and properties. Microsoft is desperate to gain market share on Google. Also, it would probably be a good idea to turn a profit in its Internet business one of these days. That's the only reason Steve Ballmer's willing to take on the Yahoo mess.
Don't forget, the cost to the software behemoth means nothing. Win, lose or draw, Microsoft has nothing to lose and everything to gain. ... Read more
The top global technology brand for 2007 is (drum roll, please) ... um, I'm not sure. One market research firm says Google, the other says Microsoft. This is embarrassing.
How about this: you're the tie-breaker. You're all buyers of technology products and services; which do you think is the better brand? Which one commands your loyalty and recurring business? I hear so much admiration for Google and so much vitriol toward Microsoft, it's hard to believe there's even a question here. But still, the question remains. Which one is it going to be? ... Read more
