Since transforming itself from fertile farmland into an high technology oasis, Santa Clara Valley - since the early 70's better known as Silicon Valley - has become the most important single technology location in the world.

The main reason being that, for most of its short history, computer/technology companies needed to either cluster around Intel (and its clones), or else work in partnership with the companies that were already established below the Santa Cruz mountains.

The California climate and lifestyle probably also played a role in their choice of location.

However, of late, there has been an Autumn wind blowing through the Valley. While many writers might put this down to an economic slowdown in Asia or problems in the former Soviet Union, the problem runs deeper than that.

To date the riches of Silicon Valley has come from ideas, design and management. It is also enjoyed a reputation as a place where ideas get from drawing board to ready-to-market quicker than elsewhere. However, from the introduction of silicon chip (in 1972) very few computers (or computer-based technologies) have actually been manufactured in the region - Apple being a rare exception.

Naturally part of the recent slowdown has been caused by poorly designed software. Much of it from the Valley itself. The Year 2000 bug was down to programmers not believing that their products would not be used by the year 2000 or else using programming languages (or macros) that themselves contained the bug.

Corporate computer budgets that would have been better spent on new equipment has been side tracked into tackling the Y2 problem. Thankfully this is a one-in-a-lifetime problem.
Harsh as it might seem, some of the problems of the modern computer industry have been partly to the customers' benefit. Competition has driven prices down and desktop computers are cheaper than ever. World wide today's biggest selling sector is the "sub-$1,000 market."

This development has resulted in the closure of several chip making plants - including two in the UK.

The arrival of the affordable desktop PC changed the face of the world. The demand for computers exploded in a way that we will never see again. Many companies proved, sadly, that they hadn't anything to offer when this boom ended.

Good times or bad, the giants of Silicon Valley such as Microsoft, Hewlett-Packard and Intel have dug themselves so deeply into the world economy that they are almost fireproof. Their bottom line may have suffered of late (like most of the computer industry), but any subsequent pick-up can only be to their benefit.

However it would take a brave man to predict a new name that could ever, in the near future, be put beside these three - Internet search engineer companies excepted.

One of the great ironies of the Valley is that certain companies, such as Intel cannot find the correct development staff. Many promising engineers have been siphoned off to the fast growing Internet and telecommunications industries. Statistics published by the US government state that the country has 400,000 vacant computer positions.

(After a visit to the Valley in September 1998 Bill Clinton promised to ask Congress to increase the number of technology-related guest workers allowed in to the United States under the so-called H1-B visa.)

The above problems are being further compounded by a lessening of the need to be near "the heartbeat of technology." The vast majority of new products don't need to be near the cutting edge of technology, and many areas of specialist high-tech expertise are outside the Valley - the satellite build-and-launch industry for example.

One of surprising developments of recent years is how the third-world has taken to computers. In places such as India and Malaysia small pockets of firms are producing software or small scale hardware at competitive prices. The reasons being simple economics: Programmers and engineers can be found for a third of the price of those in the West.

The biggest thing in computing at the moment is the Internet. However with Microsoft giving away a browser and Netscape having to follow suit, the Internet is far from Valley dependent. The major powers of the Internet are major telephone companies - who own the vital fibre-optic connections - and Internet Service Providers or ISPs.

In recent years the computer industry has tried to get involved in products that have one foot in the home entertainment field. Multimedia has only been a partial success and interactive television hasn't yet been given a fair trial.

Perhaps, in the future, the general electronic and television people can make a more of a success out of these sectors than the specialist computer firms?

Even Intel have unique challenges ahead. They trade on being at the cutting edge of chip technology and can price their goods appropriately. With the next ten years the gap between themselves and their rivals might well have all but dried up.

The industry is full of false profits forecasting the death of the PC and new ways of interacting with computers. However the pattern has been set, and while new specification and power will be expected and delivered, the home/small office PC is going to be around for a long time yet.

The reason being that fulfils most peoples needs. Most people buy a desktop computer to do four main things: Word process, handle accounts (or similar), play games and surf the Internet. Certain business user can have very specialists needs, and therefore need specialist equipment, but SV hasn't grown rich on niches.

The games computer market has been proved to be volatile - if not outright boom-and-boost. Atari, Commodore and Sinclair have all had periods of success but have never sustained it. It will be interesting to see if Sony can find a way of sustaining its present lead in this industry.

Statistics suggest that the vast bulk of those investing in the computer industry are investing in software and Internet/communications. Small companies that appear to have talent are often subject to vast stock price rises. There are even large investment firms, such as CMG, that specialise in buying and selling technology stock.

With every passing day Silicon Valley becomes less and less relevant. Not because the demand for computers and technology is on the decrease, quite the opposite, but through modern communications networks the whole world has become a form of giant Silicon Valley.

While most successful firms will probably stay in the region, in the future far fewer start-ups will feel the need to pack-their-waggons and head for the Californian sun...

Peter Hayes (Trinity) (C)