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    Home Latest News

      The Valley and the Future

      By
      eWEEK EDITORS
      -
      April 21, 2003
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        Now that Oracle CEO Larry Ellison has spoken, everyone is taking sides. Some agree with his recent statement that Silicon Valley as we know it is a thing of the past. Others say, bosh! Ellisons head is stuck in the last paradigm, and he cant see the future. We think theres enough truth in his comments that they should be taken seriously, but we arent convinced that the future of the IT industry is one of gloom and doom. Although parts of Silicon Valley have become modern-day ghost towns, things are not so bad if youre a buyer of technology, as Ellison noted. The trend toward commoditization and price/performance competition around standards is good for IT buyers, and Linux also benefits them. As we found when evaluating entries in our eWeek Excellence Awards, there is plenty of innovation in new products.

        Sure, the things that are becoming commodities—such as operating systems, servers and networks—were once the focus of vendor rivalries around competing technologies. Ellison may be looking back with longing at those days, and he may be looking ahead with apprehension to the growing threat to Oracles franchise posed by open-source databases.

        Well concede that commoditization, while generally beneficial, does bring a downside. Generic technology sold at razor-thin profit margins can lead to a dearth of investment and a consequent lack of innovation. The few vendors that remain in these markets can then exert pressure on buyers in the form of service contracts and mandatory upgrades with features they dont need.

        But if Ellisons words are an expression of nostalgia for boomtown hysteria, we have to part company. The belief that we had entered an economic era in which new rules applied did no one any good. It created the illusion that if you kept buying more stuff, you were doing your job as an IT pro. And it created the illusion among vendors that sales could be booked automatically and that any IT-sector job would make you rich in a year or two.

        The new Silicon Valley can be found in such places as Austin, Texas, which might be a reason Ellison cant find it. There, Dell continues to deliver value in new markets to growing legions of customers. Dell has accepted commoditization and glories in it. Users benefit.

        The new Silicon Valley is exemplified by companies such as AMD; the vendor has innovated doggedly for years and will roll out this week its most important challenge to the market yet, the Opteron 64-bit microprocessor. As Ciscos CEO, John Chambers, noted in an interview last week, his company is observing Moores Law by cutting Gigabit Ethernet hardware prices to the levels of 10/100M-bps Ethernet a few years ago. At IBMs annual developers conference, the company showed its Eclipse application development platform. IBM has weathered business cycles and continues to innovate, landing many patents each year.

        Ellison is right: The past is past, and the present is hard. But we do not believe that guarantees a bleak future.

        Avatar
        eWEEK EDITORS

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