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Long Live Silicon Valley

Many people claim that Silicon Valley is a dying region, but from what I've seen, it always reinvents itself.

September 3, 2012

I'm always quite amused to see articles predicting the death of Silicon Valley. Their authors suggest that innovation can be spawned in other parts of the world or that the Valley has lost its edge and is becoming irrelevant in a global economy.

Physically, Silicon Valley sits between two mountain ranges: the Santa Cruz Mountains (Mountain of the Cross) and Mount Diablo (Mountain of the Devil). Born and raised in Silicon Valley, I must admit that, at times, it seems like the Valley is tempted by both good and evil as it weathers recessions, changes in technology, and competitive attacks from Asian companies. It always rebounds, though, each time growing stronger.

I have been covering the tech industry since 1977, when the rise of semiconductor companies gave Silicon Valley its name. Semiconductors spawned PCs, disk drives, and a plethora of hardware crucial to the information age. Until about 1987, the Valley was at the heart of pretty much all of the work and advancements in computing hardware. The region, which actually spans from San Francisco to Morgan Hill, grew exponentially.

In the late 1980s, the tech industry was hit with a recession. It was then that I read the first story of the death of Silicon Valley. Interestingly, the tech companies actually use these periods of recession to invest heavily so they are ready with new products when the market recovers. So, from 1987 to about 1992, the Valley shifted much of its focus to software and creating programs that became the backbone of future enterprise solutions and consumer programs. Yes, software was created in other regions as well, but the bulk of it came from Silicon Valley.

Around 1995, we endured another recession and the Valley companies hunkered down to start to reinvent themselves. In 1997, a small company known as Netscape introduced the Internet browser and the Internet revolution began. Over the next three years, entrepreneurs from all over the world flocked to the Valley in a tech gold rush, trying to become dot-com millionaires. While most failed, those that succeeded sowed the seeds for our current Internet culture. Yahoo and Google, two of today's most influential companies, came to prominence during this time.

Of course, that period of growth ended with the dot-com bust. Still, over the next seven years, many Valley companies created market segments such as CRM and new types of consumer and business services emerged. Thanks to Apple, the iPod reinvented MP3 players and rewrote the rules of mobile music. The iPhone , introduced in 2007, changed the smartphone market forever.

Then, at the end of the last decade, every industry was hit by one of the worst recessions since the 1930s. Again, companies like Intel, Apple, and Oracle used this time to reinvest in research and development to prepare new products for both enterprise and consumer markets for when the recession ended.

Two companies majorly disrupted industry innovations that continue to fuel Silicon Valley's growth today: Facebook, although it was birthed in Boston, only started to mature once it came to Silicon Valley. It, along with many other social networks, calls this region its home. While the tablet was actually the brainchild of Bill Gates, Apple's introduction of the iPad in 2010 reinvented the tablet, causing a real upheaval in the PC market.

Now, Silicon Valley is reinventing itself again and it is coming full circle by going back to its roots in hardware. Thanks to , hardware can be prototyped quickly. Advanced processors and software also allow new hardware to be created for all types of mobile devices, sensor-based products, and next generation computers.

John Markoff and Nick Bilton of the New York Times wrote an excellent piece titled, "A Hardware Renaissance in Silicon Valley," which explains this trend much more eloquently than I ever could. I highly suggest you read it because it gives great examples of how some really exciting hardware is poised to catalyze another new phase in the Valley's growth.

I admit that being born in the Valley and observing the tumultuous tech industry its whole life, I have become an apologist for the region. If you have read my columns over the last 35 years, you know that I have been an historian of sorts, often chronicling the birth and rebirth of the Valley.

While some may feel that Silicon Valley is dying, I just can't buy it. Instead, the Valley just keeps reinventing itself and I suspect that will continue for a long time. It has the largest pool of hardware and software engineers in the world who are driven by entrepreneurial zeal. They live by the motto, "if you can dream it, you can make it."