Palo Alto, Calif., Meet Flint, Mich.

By John Hazard  |  Posted 2008-08-29

Silicon Valley could be the next Flint, Mich.

Imagine it, once-manicured corporate campuses overgrown; corporate cafeterias where gourmet meals were once served to throngs of the well paid now serving as soup kitchens to the khaki-clad masses; grocery stores forced to sell inorganic brand names; Niman Ranch beef and $16 appetizers reserved for special occasions.

It's a bleak future I don't want to ponder, but it's one Judy Estrin envisions. OK, it's my snarky and self-deprecating vision, but Estrin, the former Cisco Systems CTO, recently spoke to the New York Times' Claire Cain Miller and said she is worried that the Silicon Valley economy, so reliant on tech, could face hard times if the Valley's resident companies don't innovate. Estring spoke to Miller ahead of the publication of her new book, "Closing the Innovation Gap."

If entrepreneurs do not continue to develop groundbreaking technology, she said, the valley will be in dire straits in another decade. She compared the situation to a tree that appears to be growing well, but whose roots are rotting underground.

Emerging Markets and SUVs

My tongue-in-cheek vision of a Palo Alto shattered by the plant closure aside, a comparison to Flint and, to a greater extent, Detroit, might not be so far-fetched.

Silicon Valley today can often sound a lot like Detroit 20 years ago.

Way back when, as the 1980s came to a close, a barely wheezing U.S. auto industry began to tout a savior -- the SUV.

The SUV was no innovation. It was stylish, fit the needs (aesthetic and practical) of prosperous American families and was something the foreign automakers that were eating the U.S. automakers' lunch for decade didn't offer. Some help from U.S. regulators in the form of relaxed fuel consumption standards and the U.S. auto industry had staved off collapse.

But reality caught up, those pesky fuel consumption standards turned out to have a purpose and the needs of no-longer-prosperous American families changed.

Listening to the CEOs and CFOs discuss the financial results of the tech giants every quarter, I hear similar lyrics. There is a savior -- emerging markets.

Every quarter, Dell, Hewlett-Packard, IBM and others tell analysts and reporters not to make such a big deal about sinking sales in the United States. The emerging markets -- Brazil, China, India, Russia, Vietnam and others -- are buying the products U.S. businesses can't or won't.

That's not innovation, it's a stopgap.

And here comes reality. Dell announced Aug. 28 that it had a worse than expected quarter because sales were weak worldwide.

Mark and Me

Innovation still thrives in Silicon Valley.

  • Apple, an also-ran PC-maker, turned itself into a giant of consumer electronics. It's a darling of Wall Street.

  • Intel knows shrinking the size of chips and boosting the power is just another word for an SUV. It is pushing device control to the chip level, putting software front and center in the hardware and driving revolutionary PC designs.

  • EMC and Symantec aren't combining their parts, they're reimagining data ownership.

  • Xerox. There are too many things to say about the work that comes out of Xerox or its PARC (Palo Alto Research Center) that are making us forget Xerox was a copy company.
  • Companies have to innovate. We don't want to see "Will Code for Food" signs dotting Palo Alto or unused iPhones all over San Jose. Or, worse yet, Michael Moore storming the halls of HP trying to film "Mark (Hurd) and Me."

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