What if we're looking for the next tech boom in all the wrong places?
As the saying goes, most generals are trained to fight the last war — which is why most predictions made at the beginning of a conflict are completely wrong.
The same, I suspect, is true for all of us awaiting the big technology turnaround. It'll happen, all right, but not for the reasons we expect, and not led by the companies we know.
In other words, sitting around waiting for Cisco and Yahoo! to come back and lead us out of this financial morass, is an exercise in futility. When those two companies return, they (especially Yahoo!) will be different companies, with different business strategies, managed by different people. Market leadership will instead belong to a new group of companies we likely haven't even heard of.
From here on, every hot company you ever knew on Nasdaq will be an established, comparatively safe, long-term investment. The Promethean fire will be handed off to a new set of high-risk/high reward companies.
From the Center to the Edge
I first began to understand this about 20 years ago, when I was working on my first book, a history of Silicon Valley.
Here I was, writing about the great technology firms that had captured the world's imagination in the early 1960s — Hewlett-Packard, Ampex, Memorex, Varian, Watkins-Johnson — that were now either courtly old gentlemen or empty husks. Yet, just a few years before they had been the locus of all the entrepreneurial and investment excitement on the planet.
Those firms had been supplanted in high growth and high excitement by the chip companies — Fairchild, Intel, AMD, Motorola, National Semiconductor — but even as I wrote, those firms too — having been goosed for an extra decade by the invention of the microprocessor — were losing their edge.
Now, a new crowd had come alone: scraggly, long-haired old schoolmates of mine who had graduated from locker shockers to telephone hacking and now to personal computers. Apple, Eagle, Sinclair, Commodore, Atari and IBM Boca Raton were now the big deal, making themselves and everyone along their business channel (investors, VCs, chip suppliers, content creators, distributors, retailers, etc.) rich and powerful.
But even as I was writing the book, which I finished soon after the Macintosh introduction, the world shifted again. A shakeout ended the reign of the PC and ushered in a succession of new players — software, workstations, servers, Web browsers, e-commerce — right up to the present.
The Names Are Not the Same
What is interesting, looking back, is that if you were to make a list every five years of the dominant companies in high tech — not the biggest, but the most innovative, fastest growing, most influential, most imitated and discussed — the list would not only change every time, but it would almost always change entirely.
The only exceptions have been a handful of firms, justly celebrated and rewarded, that managed to dominate in two or more different markets: HP (instruments, calculators, printers), IBM (mainframes, PCs), Intel (memory, processors), Motorola (chips, cellular telephony) and Microsoft (software, Web — now you see why Gates would do anything to crush Netscape).