Is Silicon Valley Focusing Too Much On Consumer Tech?

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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.

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