Train Wreck

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

A long time ago - I think it was 1995 - I was seated at a long dinner table in a rather nice home in Santa Fe, New Mexico. Around the table were all the officers and directors of Cyrix - the microprocessor company that was later acquired by National Semiconductor.

One of our directors was Jack Kemp, quarterback and politician extraordinaire. Jack, who can really work a room, eventually turned the conversation to politics. The question put to the table was whom did we like in the upcoming Republican primaries and why.

I instantly panicked. I didn't even know who the candidates were. I wasn't a Democrat; I just didn't care much about politics. Back then, my opinion of political candidates was based solely on the effect they would have on my taxes.

Thankfully, the inquisition went the long way around the table. By the time it got to me, I was able to fudge a pretty good answer.

I'm more politically astute these days - which isn't saying much - but I'm still not sure if it matters to the technology industry who wins the upcoming presidential election.

(Credit: Greg Sandoval/Declan McCullagh/News.com)

A March phone survey of 600 technology employees had Obama and McCain tied.

I also checked out the CNET Technology Voters' Guide, which had Barack Obama's and John McCain's answers to a questionnaire. There was some good content regarding specific issues there, but it wasn't what I wanted to know.

All I care about is our nation's ability to compete in an increasingly global world economy. To be more specific, these are the top three technology-related political issues I'm interested in:

1. Protecting the intellectual property rights of U.S. companies overseas;
2. Helping to improve the competitiveness of U.S. companies overseas; and
3. Helping to prepare our children for an increasingly competitive and global marketplace.

Sure, there are other issues, but I think they pale in comparison to these three.

So I ask you - the ever-knowledgeable and opinionated CNET reader - which candidate will be better for our nation's global competitiveness? Or, if you think there are bigger issues, please enlighten us.

Note: the first part of this post is based on a story originally published here.

(Credit: Steve Tobak)

Here's the first installment of Train Wreck's first recurring post: Dysfunctional Executive Watch. It'll show up whenever there's enough material. Enjoy the lunacy, and let us know if you've got something to report.

You've got fraud
On Monday, the Securities and Exchange Commission filed civil charges against eight former executives of AOL Time Warner for fraudulently inflating online advertising revenue by more than $1 billion. Four of the executives agreed to pay millions in fines and return ill-gotten gains. Charges against the other four, including former CFO John Michael Kelly, are still pending.

The company had previously agreed to fork over $500 million to settle civil and criminal charges brought by the SEC and the Justice Department. ... Read more

A couple of days ago, I posted a story called "Why does the media love Apple and trash Dell." In an honest attempt (really) to explain a gap between the reality and perception of Dell's tech support, I somehow managed to denigrate the noble profession of news reporting and blogging.

What I was trying to say was that the media - as an industry - generally covers what will get them the most eyeballs, since that's how the companies (not the individuals, mind you) get paid by advertisers.

Of course, I never meant to imply that the industry as a whole or individual writers sacrifice integrity for eyeballs. I've had a long, long relationship with the media and that's simply not the case. ... Read more

I'm not a big fan of surveys, so I don't quote them often. But a recent Consumer Reports survey about PC manufacturers listed Apple as No. 1 in tech support, with Lenovo second, Dell third, and HP dead last. I should also say that Dell came in second in desktops.

I thought the headline should be "Survey says leading PC maker HP dead last in tech support." But that's not what happened. The media hailed Apple, trashed Dell, and gave HP a pass.

Horror stories about Dell's support are all over the blogosphere. Why is that? I mean, why does the media give Dell such a hard time?

Because perception is reality. But aside from being a pithy statement, what does that really mean? ... Read more

After years of heated debate and lobbying, the Patent Reform Act of 2007, which passed in the U.S. House of Representatives and was scheduled for a Senate vote this session, has been taken off the Senate's calendar. It can be revived, but its momentum has effectively fizzled.

Apparently, the Senate has better things to do with its time.

At this point, I don't wish to rehash the issues of, or my viewpoint on, the Patent Reform Act. Besides, as I've said, both sides in the debate were after only their own self-interests. Such is life in a capitalist society. (I think that's a good thing.)

What does fascinate me, though, are the strange alliances the debate over patent reform created. The Coalition for Patent Fairness--a group of more than 150 high-tech and financial-services companies that included Adobe Systems, Apple, Cisco Systems, eBay, Google, Hewlett-Packard, Intel, Lenovo, Microsoft, News Corp., Oracle, SAP, Time Warner, and virtually all the big banks--supported and lobbied heavily for the bill.

Maybe I'm missing something, but I don't believe I've ever seen a negotiation handled, with all due respect, as dysfunctionally and amateurishly as the way Yahoo has handled its negotiation with Microsoft.

Saturday's shenanigans seemed more like a reality television show than two industry giants sitting down to negotiate a deal.

Steve Ballmer

(Credit: Microsoft)

Unfortunately, negotiating with Microsoft is not a job for amateurs. There was a time when the two companies were more-or-less evenly positioned in this dual, but that time has come and gone. The weekend's activities have left Microsoft holding all the cards. ... Read more

Sun's business model does not work and it hasn't worked for a long time. Moreover, open source, MySQL, StorageTek, and SaaS (software as a service) will not fix it. Here's why, but first, a little background.

My interest in Sun began in 1999 when I had dinner with Mel Friedman, then president of Sun's microelectronics group. He was looking for a marketing VP and I was looking for a job.

At the time, Sun had essentially one customer for its UltraSparc chips, and that was Sun. I assumed the company wanted to take its chips into the merchant market, thus the interest in me. That, as it turns out, was an erroneous assumption.

I've got a question for you: How are you doing? Sure, of course you're fine. Here's a follow up: How do you know you're doing fine? Tougher question, huh?

What's that, you have a question for me? Why am I asking these inane questions?

Because, when people ask us how we're doing, we respond automatically. I'm fine, we're fine, everything's fine. After all, if we engaged everyone in a rant about the gory truth, nothing would ever get done.

But it doesn't stop there. We don't even engage ourselves in a dialogue about the gory truth, and for much the same reason. We're too busy "living."

The truth is that seemingly simple questions can actually be pretty loaded, so loaded that we'd sometimes rather not know the answer. We have all these sayings about leaving well enough alone. Why upset the apple cart? Why open a can of worms? Don't fix it if it isn't broken. ... Read more