Where is the heart of Silicon Valley

The Silicon Valley phenomenon

Peter Müller

You were wrong when, around 100 years ago, you doubted that the spirit of invention and innovations would last. After people were already familiar with electricity, cars and telecommunications, further developments did not seem foreseeable. A stroke of luck for those who persisted and continued their research. Equipped with courage and ingenuity, companies such as IBM (1914) or Hewlett-Packard (1939) emerged, which were already the harbingers of a new era. In particular, Hewlett-Packard, a company founded in a California garage, shows that there is no standing still and that every technological era has a home. The heart of the computer industry lies between Palo Alto and San José, in what is known as Silicon Valley. Intel (Santa Clara) was founded there in 1968, Apple (Cupertino) in 1976 and Sun (Palo Alto) in 1982.


Stanford University in Palo Alto is considered to be the real driving force behind the computer boom. Over the past few decades, more and more graduates have founded their own companies and thus spurred the growth of this region. The Stanford graduates Jerry Yang and David Filo, who launched a new kind of company in 1995, are already legendary. Yahoo, the most popular Internet directory, is a prime example of the second computer boom in Silicon Valley.

The internet lives in the Valley

For around two years now, more and more companies have been forming in Silicon Valley that offer products and services for everything to do with the Internet. Anyone who drives from San José to San Francisco by car today is literally inundated with Internet advertising on the edge of the highway. Local radio advertising is no exception and already consists of more than 50 percent internet spots.

While some stockbrokers with Internet start-ups like the pessimists mentioned at the beginning, only one motto applies to the majority of entrepreneurs in the USA: "If you want to survive, you have to go online". Even former internet skeptics like Bill Gates are now committed to the web. For example, the Microsoft founder claimed in autumn 1995 that the web was not of major importance for Microsoft's software strategy. At a press conference in San Francisco on September 13, 1999, Microsoft heard completely new tones. The world's largest software company presented its new Internet strategy under the code name "Megaservices". With the new Internet program modules, Microsoft wants to strengthen the Windows operating system in particular.

The millennium boom

While companies like Microsoft see the web primarily as a threat to the status quo, numerous startup companies in particular rely on the Internet. There are now service providers such as www.paytrust.com that enable you to pay all your bills via the Internet. Other providers like www.efax.com make you happy with a free fax service. Virtual florists and free internet providers such as www.netzero.com are also in vogue
Although these companies are still a long way from being profitable, the trust of donors in the Valley seems to be almost unlimited. One of the well-known sponsors is Guy Kawasaki, who with his company www.garage.com supports start-ups with advice and financial help.

With this computer euphoria in Silicon Valley, it is not surprising that almost everyone takes the Internet for granted. If you ask the hairdresser around the corner whether he has an e-mail address, you get a blank look and a short "sure". Silicon Valley produced not only its companies, but also its customers. Buying houses, furniture or pictures via the web is already taken for granted here. Providers such as www.carsdirect.com go one step further and, in addition to ordering online, even promise free home delivery of a car. That the competition and thus the quality of the service is increasing is shown not least by the official government websites. Everything is clearly structured, numerous forms can be downloaded as PDF documents, which ideally saves you going to the office.

The valley is getting more expensive

With the Internet boom, Silicon Valley now seems to have reached critical mass. Hardly any company in the computer industry can afford not to be represented here. The growth not only creates computer jobs, but also helps the entire region to become more prosperous. San José, the heart of Silicon Valley, has the lowest crime rate of any American metropolis. The unemployment rate is below the US average of 4.2 percent, and any worker can ideally become a millionaire through their stock ownership interests.

The high immigration and mobility rates not only increase the general cost of living, but above all the house and car prices. If the USA was previously considered a "cheap house country", this notion should be parted with in Silicon Valley. A small single-family home starts at around 350,000 US dollars, and a car also costs more than in Germany. However, the high costs do not prevent the second Silicon Valley boom. Companies like Cisco are already expanding to Morgan Hill, south of San José, thereby expanding Silicon Valley.

Conclusion: Silicon Valley 2000

The boom in Silicon Valley began with the computer industry, but the Internet multiplies the importance of this location. Nowhere on earth are there more high-tech companies that rely so consistently on the Internet than in the Valley. The fact that young entrepreneurs in particular are consistently promoted strengthens the location thanks to competitive pressure. If you believe the predictions of the Silicon Valley experts, the heart of the computer industry is still in its infancy.

Martin Stein, [email protected]

Stein is the new US correspondent for Macwelt Online, based in Morgan Hill, Silicon Valley.