Ellisons Views Bankrupt

 
 
By John Taschek  |  Posted 2003-04-14 Email Print this article Print
 
 
 
 
 
 
 

Taschek: Larry Ellison drove another stake through the heart of tech-sector optimism when he told The Wall Street Journal recently that at least 1,000 Silicon Valley companies should go bankrupt.

Just when we thought the economic climate for IT couldnt get worse, it did. Larry Ellison drove another stake through the heart of tech-sector optimism when he told The Wall Street Journal recently that at least 1,000 Silicon Valley companies should go bankrupt. The comments were vintage Ellison: utterly self-serving—and wrong.

There are an estimated 10,000 high-tech companies in Silicon Valley, so Ellison was calling for a 10 percent lobotomy. But Silicon Valley, of course, has been hammered already. Three years ago, venture capitalists poured $32 billion into the economy. A year later, it was $16 billion. Chances are that venture capital is hovering in the very low billions this year, and whatever VC money remains is probably not going to high tech. While hundreds of thousands of jobs have been lost across the nation, the Bay area fared worse. Its now the valley of dearth.

Ill admit that some high-tech companies are dead weight. There is little differentiation between some product lines—CRM and SFA applications have so little to distinguish among them that the companies have had to bring out the dreaded feature checklists. The fact that competitors are cannibalizing one another doesnt help their long-term economic prospects as much as it leads to feature bloat, which is another pox on IT buying decisions.

However, the fate of the CRM sector will simply be consolidation. This has happened in other segments, where vendors have faced off in cutthroat battles that have led to entire product categories collapsing of their own weight. For example, development companies consolidated when Pure and Atria merged, and then both were bought by Rational, which was bought by IBM. The middleware and application server market compressed when Sun bought NetDynamics, Netscape bought Kiva, AOL bought Netscape, BEA bought WebLogic and IBM bought CrossWorlds.



 
 
 
 
As the director of eWEEK Labs, John manages a staff that tests and analyzes a wide range of corporate technology products. He has been instrumental in expanding eWEEK Labs' analyses into actual user environments, and has continually engineered the Labs for accurate portrayal of true enterprise infrastructures. John also writes eWEEK's 'Wide Angle' column, which challenges readers interested in enterprise products and strategies to reconsider old assumptions and think about existing IT problems in new ways. Prior to his tenure at eWEEK, which started in 1994, Taschek headed up the performance testing lab at PC/Computing magazine (now called Smart Business). Taschek got his start in IT in Washington D.C., holding various technical positions at the National Alliance of Business and the Department of Housing and Urban Development. There, he and his colleagues assisted the government office with integrating the Windows desktop operating system with HUD's legacy mainframe and mid-range servers.
 
 
 
 
 
 
 

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