Category: Computers

Venture capital is up 20 percent in the 4th quarter in Silicon Valley:

Venture capitalists invested $1.62 billion in Bay Area companies in the fourth quarter — up a strong 20 percent from the $1.35 billion the quarter before, according to the MoneyTree Survey conducted by PricewaterhouseCoopers, Venture Economics and the National Venture Capital Association.

This is obviously a good sign, by itself, for Silicon Valley folks, but what about the rest of the nation? It strikes me that investors really should be warmer toward investing in areas with lower living costs, such as the rain cloud area where I live.

The old model where industries clustered in “centers” alongside their competitors made sense when the industry had a natural geographic tie to the area because of resources (steel mills where the iron ore is, canners where the fruit is, etc) but in the knowledge industry you simply need to be where people want to live. It’s not at all clear to me that biotech will cluster, or that Silicon Valley will remain the center for chips and networks.

The upside for clustering is local talent, but the downsides are losing your trade secrets to somebody’s next door neighbor, and a little too much imitation in product design. For Intellectual Property businesses, these hazards are unacceptable risks, so you don’t see a lot of genuine research labs in the Valley.

Here’s a hopeful sign for Silicon Valley techies:

Venture capitalists invested $1.66 billion in Bay Area companies last quarter — up a strong 22 percent from the $1.36 billion the quarter before, according to a survey by VentureOne and Ernst & Young to be released today. It’s the first decisive upward swing in investments after a year of treading water, and is the most funding since mid-2002.

Along with an upsurge in general funding, there was a 30% pop in seed money, much of it in wireless, VoIP, and biotech. So the Valley continues to re-invent itself.

Silicon Valley and the rest of the Greater Frisco Bay Area has always been one of the highest-cost of living areas in the world, but it’s enjoyed a productivity advantage over the rest of the US of 94%. When you factor high Silicon Valley costs into productivity, however, the area slips behind some fairly humble competitors, according to a shocking new study:

But with the cost of living factored in, the region’s advantage over the nation shrank to 31 percent in 2002. Only two years before, the Bay Area’s cost-adjusted productivity edge had been 43 percent. Moreover, the region had slipped into third place in the productivity race, behind Boise, Idaho, and Austin, Texas, after taking the cost of living into account.

It’s pretty sad when you can’t keep up with Texas, given the intellectual pretensions you find among Bay Area residents, but Frisco assemblyman Mark Leno is on the case, with the kind of forward-looking and visionary plan you only get from the nation’s best and brightest: raising the car tax in Frisco.

“Look, we paid the fee — which is 2 percent of the value of the car — from 1948 to 1998 without a word of debate or contention,” said Leno, D-San Francisco. He pointed out that the rollback was meant to last only as long as the state enjoyed good times.

Those poor Texans won’t even see this coming.

While Clark County is booming, Silicon Valley is still sucking wind, according to the illustrious Mercury News:

The county’s unemployment rate remained unchanged from the revised September rate, 7.6 percent, according to the state Employment Development Department’s monthly report. This meant 69,300 county residents were unemployed in October.

So the nation is adding jobs, the state of California is adding jobs, but Silicon Valley is sitting still. I can see why, given some of the pitches I’ve heard from Valley startups recently. Buyers of hardware and network systems aren’t as gullible as they used to be, so Valley VCs and startups need to wise up just a tad and stop promising the moon when all they really have is a trip to Idaho.

Clark County, Washington, just across the Columbia River from Portland, City of Hippies, is one of the most economically depressed areas in the entire country. So why are local officials cheery about the jobs picture? Because there’s a local hiring boom:

Fifteen businesses either relocated or expanded in the county with the help of the development council since January. Of those, 13 shared details of their operations, and together they are generating about $21 million in annual payroll with average pay of $38,800 a year per job. The county’s average wage is $31,000.

“We declare the recession over in Clark County,” said Bart Phillips, development council president, at the group’s annual membership meeting in Vancouver. “It’s evident in our numbers. Clearly businesses are looking ahead to a growing economy.”

This is happening in a county with an unemployment rate of 8.9%. So Paul Krugman, Howard Dean, John Edwards and other Dem party hacks who ask where the jobs are should please look here. Many of Clark County’s new jobs are in the services sector, the kinds of jobs that are supposed to be moving offshore; this apparently means “off the shores of the Columbia River” from over-taxed Oregon and California.

Larry Lessig?s book The Future of Ideas is an examination of the Internet?s influence on social discourse as well as an analysis of the forces shaping the net in the past and present. The message is both utopian and apocalyptic, and the analysis aspires to be technical, cultural, and legal. It?s an ambitious enterprise that would have been tremendously valuable had it been successful. Unfortunately, this is one of the most absurd books ever written. Its fundamental premise — that the Internet can only be regulated according to a mystical appreciation of the values embedded in its original design — is ridiculous, its reseach is shoddy, and its exposition of these values is deeply confused.

Apart from gross errors of theory and fact, the book is nonetheless an amusing and deeply felt diatribe against modern government, industry, and society, written with such earnestness and passion that its shortcomings in humor and insight may almost be forgiven. Unfortunately, Future has developed a cult following that threatens to go mainstream with a deeply disturbed misconception of the Internet’s design, purposes, and challenges.
Continue reading “The Future of Mediocrity”

Technology Review: Human Body Network Gets Fast

Researchers from NTT Docomo Multimedia Labs and NTT Microsystem Integration Labs in Japan have demonstrated a 10-megabits-per-second indoor network that uses human bodies as portable ethernet cables.

The network, dubbed ElectAura-Net, is wireless, but instead of using radio waves, infrared light, or microwaves to transmit information it uses a combination of the electric field that emanates from humans and a similar field emanating from special floor tiles.

Freaky.

Congresswoman Diana DeGette (D, CO) is fighting the good fight against a distasteful coalition of Internet merchandisers who want to stifle innovation. She points out the irony of a collection of companies who’ve profited from the free and open network seeking to impose draconian regulations on cable companies:

Much of the commercial success of the Internet came because there was little government restriction on how companies could operate or expand in this new market. For much of this period, the companies that thrived off of the Internet embraced the absence of federal regulation as one of the keys to their success. They have fought efforts by states to impose sales taxes on Internet purchases, opposed suggestions that the federal government establish standards for broadband, and argued against antitrust lawsuits by the Department of Justice that they asserted would cripple innovation.

But, in a switch that only students of public policy with a strong taste for irony could appreciate, these same companies that supported an absence of regulation, and succeeded because of it, are now clamoring for the federal government to impose its will on the Internet.

These companies, including Microsoft, Amazon and Yahoo, created the misnamed Coalition for Broadband Users and Innovators (CBUI) to push federal regulators to create new government rules that would prevent some broadband providers from teaming with other companies to offer consumers joint products and services.

The CBUI is a lobbying group funded by Microsoft, AOL, Disney, Apple, Amazon, Ebay, and a host of similar ilk. Larry Lessig is apparently in their employ as he was a featured speaker at a presentation they made in Washington, DC, earlier this year. He naturally attacks Congresswoman DeGette on his blog as a “cable lobbyist” in an outstanding example of the pot calling the kettle black.

Given the track record of the CBUI members, I’d be hesitant to endorse any plan they put forward. These companies have, after all, done more damage to the Internet than any other collection of businesses one could assemble, and the net effect of the regulations they propose would be to stifle innovation on the Internet infrastructure and ossify it as the pathetically inefficient network it is today, in perpetuity.

Face it, all Ebay, Amazon and the others want to do with the Internet is use it as a gigantic catalog order system. They don’t want e-mail that’s free of spam, they don’t want real-time applications like VoIP and Video on Demand, they don’t want mobility; all they want is secure credit card transactions and lots of eyeballs on their pages because people have no place to go that’s any more interesting than an Ebay auction.

Cable TV networks are large, complicated, and expensive, and they’re never going to grow toward full broadband with QoS if their business model is continually assaulted by lobbyists representing companies with no stake in their evolution because they’re doing so well today.

The Internet need not be about consumers spending money on crap they don’t need. It can be about advanced communication and entertainment, but it will never grow in that direction as long as these short-sighted profiteers have their way.

Did I mention Lessig’s working for Disney in this battle? He is.

Andy Grove predicts bad times ahead for America’s software and services industry:

He predicted that the software and services industry is about to travel the well-worn path of the steel and semiconductor industries. Steel’s market share dropped from about 50 percent to 10 percent in a few decades. U.S. chip companies saw theirs shrink from 90 percent to about 50 percent today. Now the writing is on the wall that software could suffer the same fate, said Grove, whose 1996 bestseller was titled Only the Paranoid Survive.

Grove’s solution is government policies tearing down protectionist barriers and more advanced degrees for American software engineers.

Thanks, but I’ll pass. An awful lot of software engineering doesn’t take highly-trained geniuses, and as the world economy becomes more decentralized, the export of jobs is inevitable. The solution, if there is one, is to export more products and to be more efficient in our production of them.

Interesting article about the Internet’s next iteration, The Internet Reborn, via Volokh:

A grass-roots group of leading computer scientists, backed by Intel and other heavyweight industrial sponsors, is working on replacing today’s Internet with a faster, more secure, and vastly smarter network: PlanetLab.

Most of the article deals with common-sense enhancements to speed up web browsing and conferencing that have the side effect of limiting viruses and DoS attacks. This is a good example of the benefits of good engineering.