Crisis Keeps Companies Under the Gun

By Shammi Gill  |  Posted 2001-05-28

Part 2 of the war on it is under way. Until recently, we could safely say "computers are the future," and technology was the source of many of the riches that brought us a strong economy, particularly here in California. Then came the dot-com disaster, with many companies going belly up because of stock market plunges. Those that survived face a less-than-robust economy. The goose that laid the golden egg has also hatched an ugly duckling.

Its pretty depressing now to read the business section of the paper because youre bound to learn about layoffs. Even big companies such as Yahoo, Cisco and Dell have not been able to avoid cutbacks.

Despite the human casualties of all this belt-tightening, companies have rebounded somewhat by cutting costs and still putting out quality products. But as the saying goes, when it rains, it pours. Consider what just occurred in the heartland of technology, Silicon Valley.

The California Public Utilities Commission has passed a bill to dramatically raise energy rates for residential and commercial use. Commercial prices will be raised by an average of 49 percent over what are already high rates.

Silicon Valley is under siege. People and companies that run data centers and server farms will most likely move to some other state if doing so is feasible. The big push over the past couple of years has been for those facilities to offer customers 24-by-7 service, but now the cost of using all that power could exceed profit expectations. When all is said and done, the rate increases will more than likely hit the customer in the pocketbook.

Its a lose-lose situation for consumers when a company has to choose between staying in the state and passing on higher costs, or moving to another state, taking jobs and tax revenues with it when it exits.

Rumor has it that the energy crisis will affect other states so that even if a company moves, it will be affected down the line. This scenario seems a little unlikely because other states have not rushed to follow California in deregulating power suppliers. But if its true, what are we going to do—move all the companies that are big consumers of power out of the country?

This is the next war computer companies will have to deal with. Companies across the nation are waiting to see what President Bushs energy plan has in store for the rest of the country, while companies in California bear the brunt of increased prices and rolling blackouts or look at the option of moving their facilities out of state.

Rocket Fuel