The post dot-com era has been a mixed bag for Silicon Valley. There was a period of recovery mid-decade, but business has slowed again. Pundits love to predict the ends of things, so:
Is It Over?
I don't think so. Silicon Valley keeps evolving. Every downturn ends with the growth of a new area, not the restoration of sector that declined. Thirty years ago, there was a great deal of low-value-add manufacturing in the Valley - namely, people stuffing parts into through-hole boards. That ended in the early 80s. Later, the design of specialty computer systems - mainframes, minis, whatever - disappeared as computers themselves became commodity platforms.
It pains me to say this, because my roots are in hardware design, but most hardware design is dead now. Almost all hardware is being commoditized at the system level; the design work is inside the chip, and increasingly inside software that runs on standard chips. I miss designing systems, but that's life.
If It's Not Over, Where Is It?
We have barely scratched the surface of what a handheld device can be. Today, all hand-helds have far more CPU power than decent desktop systems had a decade ago. So, fearless prediction #1: the iPhone is just the beginning of a tidal wave of small devices that will increasingly replace notebooks and desktops for most PC-centric workers. I won't go so far as to say the iPhone will dominate this market, but some similar device will if it doesn't.
(An aside: the iPhone is d***d good. I continue to be pleasantly surprised at all the ways it can help me do all sorts of things. Some are big, some are little, but it's handy. But that's another blog.)
Fearless Prediction #2: Software will continue to do well. Hardware may be a commodity, but hardware needs software. Among other areas of growth will be systems which permit people with handheld gizmos to access and work with their files and data anywhere. Gmail and things of that nature are a step in that direction; there is much more to be done.
What does this mean for your company? First of all, don't neglect software. Especially if you're a silicon startup, don't neglect software. Yes, you know you need it. Historically, chip companies have not been good at software. You will need to try much harder than you think you need to try in order to have the software you need to win in the market.
Second, see where you fit in an industry that develops along the predictions I've made here. If you don't have a good story, re-think your strategy. We can help.
More to come: green technologies
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