Technology executives are notorious for their out-of-proportion egos and hot-headed tempers. Michael Dell, Larry Ellison, Bill Gates, Steve Jobs-- even Andy Grove--are all members of a long list of distinguished high-tech executives who are famous for not suffering fools lightly, among other things.
But what happens when they're the fools? What happens when a high-powered executive has his head up his you-know-what and has lost all sense of objectivity? What happens when a gutsy employee speaks up? Well, in many cases he gets his head chopped off for his trouble. In shrink speak this is called transference, which in this case means unconsciously taking one's own feelings of inferiority and guilt out on another.
Given a choice, the vast majority of people would rather forgo the whole decapitation thing rather than declare that "the emperor (or should I say executive) has no clothes." Not surprisingly, this phenomenon is rampant in the technology industry. ... Read more
A colleague recently asked if I knew why semiconductor stocks significantly underperformed the market over the past five years, even though chip sales have seen double-digit growth during the same period. Being a veteran of the industry, I surprised both of us by not knowing the answer. So I decided to find out.
First, the facts. The PHLX semiconductor sector index (SOX) declined at a rate of 2.9 percent per year over the past five years, while Merrill Lynch's semiconductor index exchange-traded fund (SMH) declined 1.0 percent per year.
The Nasdaq, on the other hand, experienced a 4.8 percent compound annual growth rate (CAGR) during the same period. Likewise, the Dow and S&P 500 respectively grew 3.7 percent and 3.9 percent annually.
Indeed, the semiconductor sector has significantly underperformed the broad market.
... Read more
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.
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
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
Why can't we all just get along? Because it doesn't work that way. There are lots of reasons why folks don't get along. There are cultural differences, gender differences, style differences, all kinds of differences. And that's just the beginning.
According to a number of studies, at least 10 percent of the U.S. population has some sort of personality disorder. That includes depression, bipolar disorder, and borderline personality disorder, to name a few. That can't help.
In the workplace, it gets even worse. There are bullies, jerks who want to stab you in the back, and folks you just plain don't like. My personal favorite are people who are passive aggressive--they openly agree to something and then do the opposite. ... Read more
During the back half of the 1990s, I was in charge of corporate marketing at Cyrix, a Texas-based microprocessor company, and at National Semiconductor, the company that bought Cyrix.
Today, I looked at some of the CNET news stories I was quoted in back then. I couldn't believe some of the blustery crap that spewed effortlessly out of my mouth.
Everything we did was the fastest, most powerful, most highly integrated, lowest cost, blah, blah, blah. The processor gods blessed everything we designed. Customers were lining up around the block. Intel was the devil incarnate. Advanced Micro Devices was just a lowly also-ran, doomed to forever live in Intel's shadow.
As the story turns out, Cyrix imploded and National Semiconductor blew I-don't-know-how-many-billion dollars cleaning up the mess. Intel's still the world's largest semiconductor company, and AMD--well, AMD at least survived. ... Read more
Here we go again. This time it was New York State Attorney General Andrew Cuomo who ceremoniously launched an investigation into monopolistic practices by Intel.
"Our investigation is focused on determining whether Intel has improperly used monopoly power to exclude competitors or stifle innovation," Cuomo said in a statement.
The competitors in question are AMD, AMD, and of course, AMD. ... Read more
On March 21, 1983, AMD went public. Adjusted for splits, the stock closed at $9.00 that day. Today, shares of AMD closed at $7.95. That means if you invested $10,000.00 in AMD's IPO, today you'd have $8,833.33. Adjusted for 25 years of inflation, that would be about a buck and a half.
Just to calibrate that, the same investment in Intel would have gotten you about a half a million dollars, Texas Instruments about $150,000, both the NASDAQ and S&P 500 about $100,000; even National Semiconductor and LSI beat AMD, although not by much.
Of course, some investors have figured out that you can make a fortune playing the AMD roller coaster. Except for the tech bubble and a brief spike two years ago, the stock has traded in a relatively narrow range. Seems like a nerve-wracking way to invest, but I know people who swear by it. ... Read more
Once upon a time there were no iPods, iPhones, Xboxes, Blackberrys, or Tivos. Really, I'm not kidding. There were PCs, though. And they were really expensive. But we didn't have anything else to spend our money on, so that was OK. We paid $2,000 for our PCs and liked it.
Back in those days, there were three microprocessor companies--Intel, AMD, and a little Texas (it's an oxymoron, I know) company named Cyrix. If you don't recognize the name, that's because Intel had such a lock on PC makers back then that Cyrix's processors were sold primarily through the third-party reseller channel.
It's a popular misconception that Cyrix "cloned" Intel's processors. Cyrix's processors were actually all original designs. In fact, Cyrix's manufacturing partners--initially Texas Instruments, later IBM and ST Microelectronics--licensed Cyrix's designs for their own branded processors.
... Read more
