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| Still at the top of the food chain |
May 6, 2002 |
By Jason Rodham
You can map silicon valley’s rise and decline at the local Ferrari dealership.at the height of the dot-com boom, Ferrari of los gatos couldn’t keep inventory on the lot. Now, in the post-boom world, the price of a Testarosa has dropped a bit, but even when the economy was at its worst “it wasn’t a wholesale panic with people lined up to sell their Ferraris,” said sales manager Jack Gordon. “When the market took the big dip, things really slowed down, but then people decided [to move ahead with their lives].”
The same holds true of the Valley in general.
Sure, it lost an estimated 25,000 jobs last year and venture capital investment fell to a paltry US$6 billion in 2001 from an all-time high of US$21 billion in 2000, according to Joint Venture’s 2002 Index of Silicon Valley.
But as those in its lengthy food chain can attest, the key attributes that established the Valley as the heart of the world technology scene still sit firmly in place.
First and foremost is the tremendous ecosystem of local and state schools, such as Stanford University, that pump out qualified technology grads by the thousands.
Then there’s that large collection of bright people who think up new products and craft worldwide marketing strategies, including the mass of contract designers and programmers who help translate vision into reality.
“The infrastructure is in place here to take advantage of new technologies that come along and then capitalize on those technologies very quickly,” said transplanted Canadian Dale Bagnell, vice-president of the Western U.S. for Accelio, which sells Web-enabled business process solutions. “I don’t see that going away anytime soon.”
Just as the local car and housing markets have picked up since January, Forrester Research in San Francisco predicts budgets at major high-tech firms will also increase this fiscal year.
“I’d characterize it as cautious optimism,” said Charlene Li, a research director at Forrester, which predicts the U.S. technology sector as a whole, fuelled by the Valley, will bounce back by Q3 of 2003. This year, however, activity is expected to remain flat.
The characteristics that spawned Silicon Valley in the first place can be replicated in other regions, Li said, but the Valley has the critical attribute of being near all the necessary ingredients—education, money, skill and raw ideas.
“Migration to other centres has been happening for two decades now because the industry is so big that it’s hard to contain it in one area,” Li said. “People will go to other pockets of technology, but Silicon Valley is not about to become Silicon Death Valley.”
Bagnell of Accelio believes the dotcom meltdown has only made Silicon Valley’s key players stronger.
“There is something Darwinian that comes along every 10 years and it seems to cull the herd a bit.” Businesses that made it through the lean times, he added, have amalgamated with competitors or been forced to learn new skills and corporate discipline.
“People are definitely getting the feeling we’ve hit the bottom of the trough and now we’re climbing out over the side,” he said.
“Six months ago people were looking left and right and seeing no glimmer of light. There’s a little glimmer of hope out there now.”
And when you really want straight talk about the ups and downs in the Valley, ask a car dealer like Gordon, who’s been in the local market for 25 years.
“I’ve seen ’em come and I’ve seen ’em go,” he said. “I’d say the people who are running the show still have money. But maybe some of the people who can’t really see what’s on the horizon are a bit more cautious.”
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