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Summary:

The overriding contemporary image of Silicon Valley is it is focused on “light” innovation. It has gone Hollywood — focused on the glitz and the superficial. More complex innovation has been moving elsewhere, to former customers of the Valley like GE and overseas companies.

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I would rather compete with Sony than compete in another product category with Microsoft.

Steve Jobs said that to Time magazine soon after launching the iPod  in 2001. We didn’t pay much attention back then; after all, Apple was considered a dying vendor. But a decade later, the statement reads as prophetic. It signaled the start of a trend Gartner would later call “consumerization of technology,” or “the growing practice of introducing new technologies into consumer markets prior to industrial markets.”

Of course, it wasn’t just Apple; Google, Facebook, and a wide range of mobile, GPS, gaming, entertainment and social startups all have contributed to the scenario where consumers in many markets have better technologies than corporate employees. Indeed, if Cardinal Richelieu were alive today he would be tempted to write “The pen den is mightier than the sword board.” Silicon Valley has been in the middle of all this glorious empowerment of the consumer.

A decade later, though, the consumer focus means the antenna problems of the iPhone 4 or privacy flip-flops at Facebook dominate conversation. This when the “Grand Challenges” facing the world continue to mount.

Don’t get me wrong; the Valley obviously does more than just consumer tech. In a recently published book, I showcase Kleiner’s cleantech portfolio companies like Bloom Energy and Silver Spring Networks, cloud vendors like salesforce.com, Netsuite and Workday, genome-focused firms like 23andMe, and many other Valley companies.

But the overriding contemporary image of the Valley is it is focused on “light” innovation. It’s gone Hollywood: focused on the glitz and the superficial, maybe because that’s where the media focus is. Valley-based new media, and bloggers and even older media covering tech like the New York Times and Fortune mostly write about consumer tech. It could be because the grown-up Valley companies like HP and Oracle aren’t innovating much in the enterprise space. It could be because Valley VCs have given way to “super-seed” funds that parcel out much smaller rounds, and by definition, fund “lighter” innovation.

In the meantime, more complex innovation has been moving elsewhere. The book describes a number of technologies coming out of GE. A GE executive is quoted as saying:

In sector after sector, we find that technology suppliers sometimes lack deep domain knowledge when it comes to vertical technology solutions. That has opened the door for GE Healthcare, GE Transportation and other units to become technology leaders in their markets. We are a multi-billion dollar software and technology company in our own right.

The book describes BASF bio-engineering new strains of rice, BMW pioneering haptic and other user interfaces, and Hospira — a manufacturer of IV fluids — creating an infusions system with elaborate scanners, monitors and alarms. These companies have been long-term customers of the Valley, considered “buyer” organizations. This new trend of complex innovation coming out of unexpected places sets companies like these up as competitors.

Complex innovation has been moving overseas. Germany is investing significantly in its “Solar Valley,” and China’s state investment in everything from a high speed rail network to massive wind farms is funding a number of startups there. In a survey Kleiner commissioned, only six U.S. companies were listed among the top 30 global green technology vendors. Ray Lane of Kleiner is quoted in the book as saying:

The United States is clearly the biggest market for green technology. But there is a scenario in which the other countries become our largest suppliers. And of course, that means they would also be the suppliers to the rest of the world.

Travel across Africa, and you see Ray’s concern come to life. You see Chinese engineers in Ethiopia and Chinese farmers in Zambia deploying products coming out of their own fledgling technology industry, not from Silicon Valley.

Of course, Silicon Valley is the ultimate chameleon. It has amazing regenerative powers. Every few years, it transforms itself. It’s time for the Valley to move beyond Twitter and Foursquare.

In his inspiring foreword to my book, Marc Benioff, CEO of salesforce.com says:

I see less disease. I see less poverty. I see new sources of energy, amazing advances in healthtech, and a planet on which the next generation can still breathe. I am looking forward to enjoying the future that we create.

I too look forward to that future – and I hope Silicon Valley has a dominant role in shaping it.

Vinnie Mirchandani, a former Gartner analyst, is the author of “The New Polymath,” which is about a new generation of “compound” innovation where 3,5, 10 strands of infotech, cleantech, healthtech, nanotech and other tech and talent pools around the world are being leveraged to create new algorithms, new energy and new medicine.

Photo courtesy Flickr user LaMadrileña.

  1. i think the valley is (rightfully) focused on user-tech, not consumer-tech necessarily. one can argue that fb, google, apple are not merely consumer-tech but a generational leap over the kind of software pioneered/delivered by oracle, ibm, microsoft. as a result my everyday experience as a consumer is far more technologically sophisticated vs. my everyday ‘enterprise/knowledge worker’. eventually this cycle makes all software & devices more capable and people more productive (grand enough?)

    to imply fb, apple, google innovations are not ‘complex’ is short-sighted. perhaps media has focused more on the ‘light’ innovations coming from the valley?

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    1. I am not sure that is what the piece meant when it said “light” innovations. When you are making a Mint of credit card miles… to me that is indeed a light innovation versus the iPhone, Android and other such stuff which is more “heavy” innovation in comparison.

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  2. Uh, hello? Aren’t you forgetting about VMware?

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    1. Hello… VMware was founded in 1998… 12 years ago, proving that from that era of a lot of dot-com frivolousness, only serious companies survived and thrived.

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  3. anon – consumer tech or user tech – we can argue about semantics, both of us agree it has been quite a revolution empowering the consumer (and the end user) with so much tech for so little.

    Grand challenges is not my term – it is what the National Academy of Engineering and others like the Gates Foundation use to describe some truly complex challenges like reverse engineering the brain and managing the nitrogen cycle.

    sorry but compared to those, user or consumer tech in my opinion is not “grand”. and as we get into version 4 of the iPhone and other nuanced implementations, frankly consumer/user tech looks self-indulgent.

    amigosito – VMware and several others I pointed out above – but compared to the avalanche of social, mobile, gaming companies just not enough

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    1. Well I don’t see VMW mentioned in your article and I think perhaps you are muddling the line between the consumer and startup–the “den” is the new wave of cloud-powered startups that are out-innovating the big boys like Oracle (as you allude to), not some dude playing Farmville on his Android.

      I can see your point about focusing on frivolous technologies but Farmville/Zynga is a perfect example of how tech is empowering the little guy (the “den”) to make it big in a market dominated by Microsoft and EA (“the board”). This avalanche you speak of is the equivalent of a punkrock software revolution, and I don’t think there are many 20-somethings in their garage doing genetic experiments. At least I hope not.

      You’re also overlooking the countless business and clinical applications for iPhone, iPad and other mobile devices that have their roots in the consumer market–far from frivolous. And I could go on and on about Genentech, Tesla, Varian, Solyndra and all the other non-software companies that are making a real difference.

      Perhaps a better question would be, “how is a behemoth GE able to keep innovating?” Or how about, “did Harvard MBAs destroy Silicon Valley’s culture of innovation when they swarmed in during the Internet boom?” Or (agreeing with you here) “why is Silicon Valley not taking more of a leadership position in green tech?” And lastly, “why is San Mateo county fighting to stop the high-speed rail project?”

      I’m not sure what would be “enough” for you, but I am pretty sure that Marc Beniof is full of crap. He’s big on talk, and it’s not like Salesforce is saving the world.

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      1. you make it sound like I define what is “enough” or not. The fact is our Grand challenges in health, ecology, complex business issues are real whether the Valley chooses to address them or not.

        consumer vs user – consumer tech has been adopted in a number of progressive companies and then it becomes user tech. Often it is the compelling economics of consumer tech, often times, users bring into workplace what they like at home. but Apple, Google did not start off aiming their products at end users – they have evolved there.

        On Benioff, I think you are being less than charitable. As an Oracle alum, he could have taken the easy route and delivered another piece of code for IBM, Accenture. Infosys to support. Instead he chose to build data centers, he chose to come up next-gen apps management, he has been working on 5 minute upgrades which take months in typical companies. And he did that starting a decade ago – that is the kind of non-conventional, complex innovation I would love to see more of.

        and of course, salesforce is not creating new medicine or energy but Benioff’s personal charities etc are helping there. Please do the man a favor and should read his whole foreword I had extracted at

        http://florence20.typepad.com/renaissance/2010/06/marc-benioffs-inspiring-foreword.html

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      2. and btw Benioff is very generous to consumer tech and how it has inspired his biz model

        I am not dissing consumer/user tech just saying there many more dragons to slay

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      3. Also salesforce is no innovation, CRM field is super crowded. sugarcrm, oracle, microsoft and others have same offering. Salesforce is nothing but a bunch of web forms built on Oracle innovation platform.

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      4. Vinnie – Thanks for replying to my comments, you are right that I should give Mr. Benioff more credit where credit is due for his efforts.

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  4. [...] Is Silicon Valley Focusing Too Much On Consumer Tech?. No Comments [...]

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  5. I say that Salesforce is doing something right. Maybe it is built using Oracle buts its market value is up 10 fold in 6 years. This is great success for those who matter, the shareholders.

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  6. Is Silicon Valley Focusing Too Much On Consumer Tech?

    Yes! The SV-VC thinking is too small and narrow…not focused on creating equity value for the consumers…

    “The fact is our Grand challenges in health, ecology, complex business issues are real whether the Valley chooses to address them or not.”

    “a revolution empowering the consumer” Vinnie Mirchandani

    A comprehensive Product Equity Value© study was recently completed relating the 66,400 global public companies with average capitalization of $1.5 billion to 99 countries populations and the 7 results are astonishing!

    19 countries are saturated with public companies
    Countries with the most public companies create more value for its citizens
    The US needs to add 4,004 new public companies starting in 2011
    The world need 340,600 public companies and must add 85,540 new public companies immediately to avoid global economic collapse!
    The revenue of a public company is never supposed to be greater than the company’s capitalization (Katchings First Law of Public Company Finance)
    The Gross Domestic Product of a country is NEVER supposed to be greater than the value of the country’s publicly traded companies (Katchings Second Law of public Company Finance)
    The average capitalization of 85,540 new public companies will be $9.702 billion

    The world is ready to explode in the formation of 85,540 new public companies in 2011 to accommodate the 3.2 billion consumers’ global labor force.

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  7. [...] he looked longingly at my iPhone with a mixture of wonder and envy. Need more proof? Check out this great article on GigaOM lameting the consumerization of Silicon Valley by Vinnie Mirchandani, former Gartner analyst and author of the book “The New [...]

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  8. Well said Vinnie. Something I’ve thought of for some time but never put into words (or researched as well as you have).

    I think the Valley today is less about innovation and more about making money. While I’m not expecting entrepreneurs to build companies/products without dreaming of a big payoff I think the percentage of entrepreneurs who think first of revolutionary change and second of money has dwindled as compared to those who prioritize the other way around. No data to back up, just a hunch.

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