SILICON VALLEY----- USA

1. SILICON VALLEY
SUCCESS
A.ARPUTHA SELVARAJ APMP IIM CALCUTTA

2. What is Silicon
Valley? 1,500 square miles
 35 Cities, 4 counties
 2.4 million people, 40
percent foreign born
 1.2 million workers
 81 percent high school
diploma; 40 percent
college degree
 25 percent of workforce in
high-skill occupations
 Income average 60
percent higher than US
 5 percent US GNP, 10
percent of US patents
 Productivity rate 50%
higher than US average

3. MOST IMPORTANT
CHARACTERISTIC: Region
Continually Re-Invents Itself

4. MILESTONE SILICON VALLEY INNOVATIONS
 Vacuum tube (Varian)
 Transistor and Integrated Circuit (Fairchild)
 Microprocessor (Intel)
 Microcomputer (Apple)
 Graphical User Interface (Xerox PARC)
 Relational Databases (IBM Almaden)
 Internet Search (Google)
However, the Valley’s edge
does not stem from
innovation alone ...

5. … but also from
entrepreneurship
Silicon Valley has a remarkable capacity to create
and grow new companies
New Companies New Technologies
(Entrepreneurship) (Innovation)
Endogenous Growth
New Wealth Creation
+


6. Valley spawns the leading
companies in every technology
generation
1950s Defense Electronics
Hewlett-Packard, Varian
1960s/
1970s
Semiconductors
National Semiconductor, Fairchild. Intel,
AMD
1980s Personal Computers, Workstations
Apple, Silicon Graphics, Sun
1990s Network Computing, packet switching
Cisco Systems, Sun
Internet
Netscape, Yahoo, eBay, Google,
2000s? New technologies, new companies, new
business models

7. LARGEST SILICON VALLEY FIRMS
1982
1. Hewlett-Packard
2. National Semiconductor
3. Intel
4. Memorex
5. Varian
6. Environtech*
7. Ampex
8. Raychem*
9. Amdahl*
10. Tymshare*
*no longer existed in 2002
2002
1. Hewlett-Packard
2. Intel
3. Cisco*
4. Sun*
5. Solectron
6. Oracle
7. Agilent*
8. Applied Materials
9. Apple
10. Seagate Technology
11. Also: Maxtor*, Palm*,
Google*,Cadence*, Adobe*,
Yahoo*
*didn’t exist in 1982

8. LARGEST DETROIT FIRMS
1982
1. Ford
2. General Motors
3. Chrysler
2002
1. Ford
2. General Motors
3. Daimler-Chrysler

9. Technology Regions Will Always
be Driven by Waves of Innovation
• New technologies drive dynamic wavesNew technologies drive dynamic waves
• Entrepreneurs take advantage of new opportunitiesEntrepreneurs take advantage of new opportunities
• Swarms of new firms cluster around new technologies creatingSwarms of new firms cluster around new technologies creating
short term bubblesshort term bubbles
• New products eventually become commodities and investmentNew products eventually become commodities and investment
leads to breaking of bubbles.leads to breaking of bubbles.
• New technologies emergeNew technologies emerge
from the convergence of oldfrom the convergence of old
technologies and the processtechnologies and the process
of “creative destruction”of “creative destruction”
begins againbegins again

10. “SILICON VALLEY LOSING IT’S
EDGE.” Cover Story, Business
Week.
“DREAMS OF STRIKING IT RICH
FADING IN SILICON VALLEY.”
Front page, Los Angeles Times
“THIS IS THE END OF SILICON
VALLEY AS WE KNOW IT.” Larry
Ellison, CEO of Oracle.

11. “SILICON VALLEY LOSING IT’S EDGE.”
Cover Story, Business Week, 1985.
“DREAMS OF STRIKING IT RICH FADING
IN SILICON VALLEY.”
Los Angeles Times, 1991.
“THIS IS THE END OF SILICON VALLEY
AS WE KNOW IT.”
Larry Ellison, 2003.

12. So what’s the secret?
A HABITAT for Innovation
1. Results oriented meritocracy
2. Climate that rewards risk and tolerates failure
3. Strong markets (capital, labor)
4. Mobile, fluid workforce
5. Favorable government policies
6. Open business environment
7. Universities and national research institutions that collaborate with
industry
8. Specialized infrastructure: venture funding, lawyers, accountancies,
executive search
9. Quality of life
10. Cluster effect

13. So what’s
happening right
now in Silicon
Valley?

14. RIGHT NOW?
It’s not the go-go 90s anymore
 Thank goodness!
 Region added 350,000 jobs. Sustainable?
 Since 2001, we have lost 220,000 jobs.
 Net gain of 130,000
Now, with retrospect, we understand the meaning
 Internet search was another wave (Google, Yahoo)
 Internet is a viable tool for commerce (eBay, Amazon)
 Consolidation, boom-bust cycle is taking its predicted
course

15. Rip Van Winkle
Theory
If Rip Van Winkle fell asleep in
1998 …
… and woke up again in 2006 …

16. … He would actually be impressed!

17. Even
through the
downturn,
most key
indicators
continued
to rise

18. Value-Added
per
employee
grows at
twice the
national rate

19. Region’s
share of
Venture
Funding
Continues
to Grow

20. Average
Pay Still
Rising

21. Income
Distribution
Narrowing

22. High School
Performance

23. Housing
Density
Increases

24. But
disparities
persist by
race

25. Housing
still out of
reach for
too many

26. But Rip Van Winkle would
also be confused by
something:
Valley productivity is
not translating into
burgeoning job
growth.

27. In the future prodigious job growth
in Silicon Valley is unlikely.
We can most likely expect steady,
incremental growth.
The major opportunities will be in a
few key clusters, and the
industries that support those
clusters.
Those jobs will be hard to get, and
require significant training.

28. Why? What’s Happening?
1. Intense competition. Rise of
competitor regions
 Companies doing more with less. They
have to.
 Bay area workers doing it with
productivity gains.

29. Why? What’s Happening?
2. Offshoring and outsourcing.
Old story, except now higher-
end functions going off shore
– Design
– R&D

30. Why? What’s Happening?
3. Technologies we invented
eliminated whole classes of
jobs
Administrative class
Archivists, others

31. Why? What’s Happening?
4. Many of the emerging
clusters (web 2.0) aren’t
big job generators to begin
with.

32. Why? What’s Happening?
5. Nature of capitalism itself is
changing
Vertical integration a thing of the past
Companies down-sizing
Focus on key competencies
Groaning under weight of overhead
Health care, benefits
Reducing FTEs, using contractors

33. To survive
and thrive,
Silicon
Valley has to
be innovative,
productive,
and

34. To survive and
thrive, Silicon
Valley workers
must be
innovative,
productive,
willing to re-
invent
themselves, and

35. SILICON VALLEY WORKER OF THE
FUTURE?
 Will work in numerous places over course of
career
 Will have to re-train and re-tool
 Will have to distinguish self with a unique
competency
 Will shoulder a heavier burden for coverage
and benefits
 Will need high-end skills: language, writing,
communication, technical expertise

36. Jobs Leaving Silicon Valley
AREAS WHERE
SILICON VALLEY IS
NOT PRICE-
COMPETITIVE
OCCUPATIONS LEAVING THE VALLEY
Mass Production High tech manufacturing and assembly (except
high-end)
Back-office
Operations
Office support (e.g., data entry clerks, etc.)
Business and financial support (e.g.,
processing staff)
IT support specialists
IT administrators
Legal assistants
Statistical analysts
Product And
Process
Enhancement
Entry-level computer and software engineers
Quality assurance and test engineers
Product and process engineers

37. Silicon Valley Job Strengths
Bay Area
Competitive
Strengths
Sample Occupations Aligned with Regional
Capabilities
New Business
Creation and
Entrepreneurship
Venture capitalists, lawyers and other occupations in the
entrepreneurial infrastructure
Research In
Advanced
Technologies
and
Cross-disciplinary
Research
IT, biotech and nanotech R&D professionals
Select computer and software engineers for research and
advanced development (e.g., architects, systems level software
engineers, software engineers with domain expertise)
Select engineering including electrical, mechanical and
electronics
Concept And
Market
Development
Strategic managers in sales and marketing
Product marketing managers
Global Integrated
Management
Managers of global teams and assets (headquarters, product
development, IT, HR, etc.)

38. WAGE GROWTH IN KEY SECTORS, 2002-
2005

40. So what’s next
for Silicon
Valley?

41. The Next Big Wave?
1. We’re not finished with
information technology yet
Telecommunications, hand-
held devices, entertainment
Ubiquitous internet, WIFI,
WIMAX
Web 2.0

42. The Next Big Wave?
2. Alternative Energy, Clean
Technology, Green
Buildings
–VC activity starting a mini
boom

43. The Next Big Wave?
3. CONVERGENCE
Nanotechnology,
Biotechnology, and
Information Technology

44. Examples of Convergence

45. Our Organization
Joint Venture: Silicon Valley Network
Business
Community-Based
Organizations
Labor
Government
Higher
Education

46. The Joint Venture Program
 Tax and Fiscal Reform
 Technology Convergence Consortium
 Health Care
 Electronic Medical Records
 Wireless Infrastructure Initiative
 Transportation and Housing
 Unified Building Code
 Cell phone coverage
 Disaster Preparedness

47. For more information …
www.siliconvalleyonline.org

48. Thanks
Email me : arputhaselvaraj@gmail.com