a history of silicon valley/ san jose state univ

A History of Silicon Valley 1900-2010 The Greatest Creation of Wealth in History

(a moral tale)

being a presentation by piero scaruffiwww.scaruffi.com

adapted from a book by Arun Rao and piero scaruffi

www.scaruffi.com2

Piero Scaruffi

• Cultural Historian• Cognitive Scientist• Blogger• Poet• www.scaruffi.com

www.scaruffi.com3

Where are the pictures?

• This slide presentation omits the pictures to make it smaller and easier to download

• Pictures of machines and buildings are here:– A visual history of computing:

http://www.scaruffi.com/monument/silicon/cm.html– A historical tour of Silicon Valley:

http://www.scaruffi.com/politics/svtour.html• If you have time and skills, use these pictures to

create a more appealing version of this presentation and send it to me for approval

www.scaruffi.com4

What the book is about…

• The book is a history of the high-tech industry in the San Francisco Bay Area (of which Silicon Valley is currently the most famous component)

www.scaruffi.com5

Electrical Engineering

• The challenge for the West Coast in the 19th century: to carry high-tension voltage (dams) over long-distances to the cities of the coast

• Harris Ryan at Stanford (1905) inaugurates a cooperative model between university and industry

• The Bay Area's electrical power companies use the Stanford High Voltage Laboratory

www.scaruffi.com6

Radio Engineering

• San Francisco's port needs a wireless communication system

• Charles Herrold in San Jose starts the first radio station in the USA with regularly scheduled programming (1909)

• Cyril Elwell’s FTC in Palo Alto, funded by Stanford’s president, commercializes Valdemar Poulsen’s arc transmitter (1910) and acquires Lee DeForest’s vacuum tube to amplify electrical signals (1912)

• FTC builds the first global wireless communication system

• The Navy is the biggest consumer of radio communications (World War I)

www.scaruffi.com7

Radio Engineering

• The Bay Area becomes one of the largest centers for amateur radio (Bay Counties Wireless Telegraph Association, 1907)

• Some ham-radio amateurs: Charles Litton, Frederick Terman, ….

www.scaruffi.com8

Society• Chinese railway workers and agricultural workers (the

largest Chinese community outside Asia), Italian fishermen and farmers, Japanese farmers, Mexicans

• San Francisco is the most unionized city in the USA (teamsters and longshoremen)

• John Muir's Sierra Club (1892) leads the first environmental protests

• The American Anti-Imperialist League (1898) organizes the first anti-war movement

• The Union Labor Party (1901) becomes the first pseudo-socialist party to win a mayoral election in a USA city

www.scaruffi.com9

Culture

• The California Society of Artists (1902), California College of the Arts and Crafts (1907)

• Artists move to San Francisco’s "Montgomery Block" and to Carmel

• Halcyon, a utopian community (1903)• The Panama-Pacific International Exposition (1915)• Ansel Adams’ photographs of Yosemite (1921)

www.scaruffi.com10

Meanwhile elsewhere…

• Remington’s mass-produced typewriter and the QWERTY keyboard (1873)

• William Burroughs' adding machine (1885)• Electricity• Hermann Hollerith's tabulator of 1890 hat processes

punched cards that store information• NCR’s electrical cash register (1894)• IBM (1911)

www.scaruffi.com11


• The automated office: – typewriters (a field dominated by Remington

Rand), – adding machines (a field dominated by

Burroughs), – tabulating machines (a field dominated by IBM) – cash registers (a field dominated by NCR)

• Midwest and East Coast industries dominate office automation

www.scaruffi.com12


• Frederick Terman at Stanford encourages students to start businesses (1925)

• Companies started by ham-radio hobbyists: Heintz & Kaufmann, Litton Engineering Labs, Eimac, …

• A 21-yo amateur, Philo Farnsworth, carries out the first all-electronic television broadcast (1927)

• The lawyer Donald Lippincott defends Farnsworth's intellectual property against RCA (1930)

www.scaruffi.com13

Defense

• Moffett Field (1933): the Navy opens a base between Palo Alto and San Jose

• Ames Research Center (1939): the US government opens an aeronautical laboratory at Moffett Field

www.scaruffi.com14

Nuclear Engineering

• Robert Oppenheimer (UC Berkeley, 1929) studies Eastern philosophy and contributes to socialist causes

• Ernest Lawrence (UC Berkeley, 1931) designs the first successful cyclotron (a particle accelerator)

• Ernest Lawrence’s "big science": a large interdisciplinary team of engineers and scientists to focus on a practical project

• John Lawrence (1936) founds the Donner Laboratory to conduct research in nuclear medicine

• First Nobel laureate of the Bay Area: Ernest Lawrence (Berkeley, 1939)

www.scaruffi.com15

Culture

• Hans Hofmann (UC Berkeley, 1930) promotes modern art

• Dominant fine arts: photography, wall painting• Group f/64 founded by Bay Area-based

photographers (1932)• The first professional ballet company in the USA

(1933)• The Museum of Art (1935), the second museum in

the US devoted exclusively to modern art

www.scaruffi.com16

Culture

• Henry Cowell, a bisexual composer, designs the first electronic rhythm machine (1930), promotes atonality, non-Western modes, percussion ensembles and even chance composition (UCSF, 1935) and lives a parallel life as a successful pop songwriter

• Lou Harrison incorporates Chinese opera, Native-American folk, jazz and later the gamelan music of Indonesia into Western classical music

www.scaruffi.com17

Culture

• Villa Montalvo (1939) in the South Bay inaugurates the first artist residency program in the Western states

• Frank Stauffacher starts the "Art in Cinema" series at the Museum of Art (1946)

• San Francisco artists are mostly independents and eccentrics

• Achilles Rizzoli

www.scaruffi.com18

Society

• San Francisco’s Ferry Building is the second busiest transportation terminal in the world (1930)

• Not a single bank fails in San Francisco during the Great Depression (1929-33)

• The Bayshore Highway reaches San Jose (1937)• The Oakland Bay Bridge and the Golden Gate Bridge

(1936 and 1937)• The "Golden Gate International Exposition“ (1939),

held on an artificial island in the middle of the bay, Treasure Island

www.scaruffi.com19

Society

• Legendary nightlife, e.g. gay bar Finocchio (1936) • “The organized crime of Chicago and New York has

no chance to infiltrate San Francisco because the entire city is just one big racket”

www.scaruffi.com20

Electronics

• Stanford's professor William Hansen and brothers Sigurd and Russ Varian develop the klystron tube (1937), the first generator of microwaves (a device that enables the airborne radars of World War II)

• Fred Terman's students William Hewlett and David Packard found a company (1939) in a Palo Alto garage to sell oscillators

• The Varian story is a repeat of the FTC story: interaction between industry and university leads to an advanced technology whose first customer is the government and its first application is warfare

www.scaruffi.com21

Meanwhile elsewhere…• Vannevar Bush’s mechanical analog computer or

“differential analyzer” (1931)• Theory of computation: Turing Machine (1936) • George Stibitz’s relay-based binary calculator, the

"Model K“ (1937)• John Atanasoff’s electronic digital computer (1938)• Konrad Zuse’s Z3 (1941), the first programmable

computer, the first hardware implementation of the Turing machine

• John Von Neumann’s stored-program architecture (1945)

www.scaruffi.com22

World War II• Terman in charge of electronic warfare at the Harvard

Radio Research Laboratory (1941)• Oppenheimer manager of the “Manhattan Project" to

build a nuclear bomb (1942)• Lawrence designer of the electromagnetic process to

separate the explosive U-235 from uranium • Edwin McMillan and Glenn Seaborg (Berkeley) use

the cyclotron to discover a new element, plutonium • Alexander Poniatoff invents the airborne radar

antenna and starts Ampex to commercialize the German tape recorder (1944)

www.scaruffi.com23

Meanwhile elsewhere…• Britain: Tommy Flowers’ Colossus Mark 1 (1943), the

world's first programmable digital electronic computer• Boston (IBM and Harvard): Howard Aiken’s Harvard Mark

1 (1944), the first computer programmed by punched paper tape

• Philadelphia: John Mauchly’s and Presper Eckert’s ENIAC (1946)

• New York: IBM's SSEC (1948), an improved version of the Harvard Mark I

• New Jersey (AT&T): John Bardeen’s, William Shockley’s and Walter Brattain’s transistor (1947), a better electrical amplifier than the vacuum tube made of semiconducting material.

www.scaruffi.com24

Meanwhile elsewhere…• Boston: Vannevar Bush’s Memex, an

electromechanical hypermedia device (1945)• Boston: Norbert Wiener’s Cybernetics (1947)• New Jersey: John Von Neumann’s self-reproducing

automata. • New Jersey: Claude Shannon Theory of Information

(1948)• Main centers for research on electronic computing:

Boston (Harvard and MIT), Philadelphia (Moore School of Electrical Engineering, BRL), New Jersey (Bell Labs, Princeton, RCA Labs), New York (Columbia and IBM)

www.scaruffi.com25


• Venture capital firms (1946): Boston's American Research and Development Corporation (ARD); New York's J.H. Whitney & Company; and New York's Venrock

www.scaruffi.com26

The Cold War

• The SRI (1946), Stanford’s industrial research center • Fred Terman brings defense contracts to Stanford• Bill Hansen’s linear accelerator at Stanford (1947)• Varian (1948) to work on radio, radar and television

www.scaruffi.com27

Culture

• The San Francisco Renaissance: – Kenneth Rexroth’s Poetry Center at SFSU and

Festival of Modern Poetry (1947)– Robert Duncan’s "The Homosexual in Society“

(1944)– Muriel Rukeyser, a Jewish feminist

www.scaruffi.com28

Meanwhile elsewhere (computers)• Philadelphia: John von Neumann’s EDVAC (1949), a

stored-program electronic computer • Britain: Alan Turing’s Pilot ACE (1950)• Britain: Ferranti’s Manchester Mark 1 (1951), the first

computer to use Williams tubes for RAM• Washington: SEAC (1950), a scaled-down version of the

EDVAC, using semiconductors for its logic• New York: Remington Rand’s Univac division (1950)• New York: Grace Murray-Hopper’s compiler for a Univac

programming language (1951)• New York: IBM’s first electronic computer, 701 (1952)• Minneapolis: ERA’s Atlas for the Navy (1950)

www.scaruffi.com29

Meanwhile elsewhere (computers)• Boston: Alan Wang’s Magnetic-core memory• Boston: Jay Forrester’s Whirlwind at the MIT (1951), the first

real-time system and the first computer to use a video display for output

• New York: Remington Rand’s Univac 1103 (1953), the commercial version of ERA’s Atlas II with magnetic-core RAM

• New York: IBM’s and Columbia Univ’s NORC for the Navy (1954)

• New York: Gene Amdahl ‘s IBM 704, a commercial version of the NORC with magnetic-core RAM (1954)

• Wang outsources magnetic-core manufacturing to the Far East, the first computer component whose price declines rapidly thanks to cheap foreign labor

www.scaruffi.com30

Meanwhile elsewhere (computers)• Boston: MIT’s and Navy’s SAGE (1954) to rapidly

process the data coming (in digital format by modem over telephone lines) from a network of radars for monitoring and intercepting enemy rockets

• IBM passed Remington Rand for number of installed computers and becomes the world leader in computers (1955)

• The electronic megacorporations (General Electric, RCA) are followers, not leaders (1956)

• New York: IBM AN/FSQ-7, IBM’s version of Whirlwind (1958) the largest computer ever built (275 tons, 2000 square meters of floor space, 55thousand vacuum tubes)

www.scaruffi.com31

Meanwhile elsewhere (computers)

• The computer– Invented by scientists interested in solving

complex mathematical problems such as nonlinear differential equations

– First practical application: warfare– First commercial computers: large office

automation players (Remington Rand, IBM, NCR, Burroughs)

www.scaruffi.com32


• The computer– The first companies to realize the non-scientific

and non-military potentiality of the computer are the ones making typewriters, cash registers, adding machines and tabulating machines, not the ones making electronic components

– General Electric has the know-how, the engineers and the capital to dwarf IBM and Univac in the computer field; but it doesn't.

www.scaruffi.com33


• The Computer– The Whirlwind and SAGE projects give Boston a

huge lead in computer science over the rest of the country

– Boston is the main center for training computer scientists in the entire world

– In 1959 there were about 6,000 computers in the USA

www.scaruffi.com34

Meanwhile (semiconductors)

• AT&T shares the technology of the transistor with anyone that can improve it (1951): Sylvania (Boston), Motorola (Arizona), Texas Instruments (Texas), Transitron Electronics (a Boston startup)

• Applications of transistors: Raytheon’s hearing aids, Regency’s portable radio (october 1954)

• The portable radio marks the birth of consumer electronics, a trend towards miniaturization and lower prices

• The first fully transistorized computer, the TRADIC (1954), is built by AT&T for the Air Force in 1954, but AT&T is barred from commercial computer business

www.scaruffi.com35

The West-Coast Computer Industry

• Aviation industry of Los Angeles: Northrop Aircraft, Raytheon, Rand and Hughes

• UCLA’s SWAC for the government's National Bureau of Standards (1950)

• CRC, a Northrop spinoff (1950)• Raytheon’s Raydac (1953)• Rand’s IAS computer (1953)• Packard Bell’s computer labs (1957)• All of them funded, directly or indirectly, by military projects • During the Korean war (1950-53) California passes New

York as the state receiving the largest share of military contracts

www.scaruffi.com36

Birth of the High-tech Industry in the Bay Area

• Stanford Industrial Park (1951) and the Terman doctrine (land to be leased "only" to high-tech companies): Varian (1951), Hewlett-Packard, General Electric (1954), Eastman Kodak, Zenith (1956), Lockheed (1956).

• Hewlett-Packard’s corporate culture: focus on human resources (stock options for employees, women executives)

• High-tech IPOs: Varian in 1956, Hewlett Packard in 1957, and Ampex in 1958.

• IBM’s West-Coast laboratory in San Jose (1952)

www.scaruffi.com37


• Computers– IBM’s RAMAC 305 (1954), the first computer to

use magnetic-disk storage – SRI’s ERMA for Bank of America (1955)– Berkeley’s CALDIC (1954)

www.scaruffi.com38


• Main industry: Defense– Santa Clara Valley's largest company: Sylvania’s

Electronic Defense Lab– General Electric’s Electric Microwave Lab to make

electronic devices for radars and missile defense systems (1954)

– Lockheed’s submarine-launched ballistic missile Polaris and satellite system Corona (1956)

– Raychem (1957) to make wires and cables for the military and aerospace industry

– NASA’s research center at Moffett Field (1958)

www.scaruffi.com39


• Electronics– The Cold War is a gold mine for electronics– "The Group" of private investors (1955) to invest in

promising electronics companies of the Bay Area– Watkins-Johnson (1957) to manufacture

components for electronic intelligence systems, one of the first venture-capital funded companies in the Santa Clara Valley

www.scaruffi.com40


• Semiconductors– Shockley Semiconductor Laboratory (1956)– Fairchild Semiconductors (1957), the first venture-

funded "start-up" company of the Bay Area: Robert Noyce, Gordon Moore, Jean Hoerni, Eugene Kleiner, etc

– The semiconductor industry does not require huge capital investment

www.scaruffi.com41


• Science– Nobel laureates: John Northrop and Wendell

Stanley (Berkeley, 1946), William Giauque (Berkeley, 1949), Glenn Seaborg and Edwin McMillan (Berkeley, 1951), , Felix Bloch (Stanford, 1952)

– Lawrence Livermore Lab to develop hydrogen bomb (1952) and nuclear fusion (1953)

– Berkeley Lawrence Lab’s Bevatron (1955) detects antimatter

www.scaruffi.com42

Culture

• Bay Area Figurative Painting (1950)• Alan Watts’ radio program promotes Eastern

philosophy (1953 )• Peter Martin’s literary magazine "City Lights" (1952)

and Lawrence Ferlinghetti’s bookstore "City Lights“ (1953) promote the Beat Generation

• Allen Ginsberg's recitation of "Howl“ (1955)• Beat generation of poets• Gary Snyder and Philip Whalen adopt Zen Buddhism• San Francisco International Film Festival (1957)

www.scaruffi.com43

Society

• Massive state-wide infrastructure building• Weather, military facilities and economic boom attract

immigrants from other states• San Jose experiences a population boom• "Daughters of Bilitis" (1955), the first exclusively

lesbian organization • CIA’s MK-Ultra project (1959) to experiment on drugs

www.scaruffi.com44


• Artificial Intelligence– Marvin Minsky’s simulation of the neural network of the

brain (1951)– Conference on Mechanical Translation (1952)– George Devol’s Ultimate, the first industrial robot (1961– Conference on Artificial Intelligence (1956)– Allen Newell’s and Herbert Simon’s Logic Theorist

(1956)– Frank Rosenblatt’s Perceptron (1957)– Morton Heilig’s Sensorama Machine (1957)– Oliver Selfridge’s Pandemonium (1959)

www.scaruffi.com45


• Software– During the 1950s most programs came bundled

with the computer– User-written programs were not sold: they were

made available to the community of users of the same machine ("Share“, "Use")

– The FORTRAN programming language (1957), the first practical machine-independent language, and COBOL (1958), invent the job of the software engineer,

– Software companies: Rand’s SDC (1955), Computer Usage Company (1955), CEIR (1957)

www.scaruffi.com46

Venture Capitalists

• Small Business Investment Company Act (1958)• Draper, Gaither and Anderson (1958), the first

limited-partnership venture-capital firm in California• Continental Capital (1959)• Tommy Davis and Arthur Rock (1961) • Bill Draper and Franklin Johnson (1962)

www.scaruffi.com47

Semiconductors

– Fairchild Semiconductors’ planar integrated circuit (1961)

– Fairchild Semiconductors employees: Don Farina, Don Valentine, Charles Sporck, Jerry Sanders, Jack Gifford, Mike Markkula

– Signetics (1961), first Fairchild spinoff– Main customers of integrated circuits: the Air

Force and NASA

www.scaruffi.com48

Life Sciences

• Stanford hires Carl Djerassi (1959), inventor of the birth-control pill

• Alejandro Zaffaroni’s Syntex relocates to the Stanford Industrial Park (1963)

www.scaruffi.com49


• New York– IBM 7000 transistorized series (1960)– IBM’s SABRE (1960), the first online transaction

processing, an adaptation of SAGE to automating American Airlines' reservation system

– GE’s IDS (1961), the first database management system

• Boston (MIT)– CTSS (1961), the first time-sharing system– "Spacewar" (1962), the first computer game– Ivan Sutherland’s "Sketchpad“ (1963), the first

computer program with a GUI

www.scaruffi.com50


• US Government– Paul Baran (Rand Corp): a distributed network of

computers can survive a nuclear strike (1962)– Ted Nelson (Harvard Univ): hypertext (1965)– Joseph Licklider (DARPA’s IPTO) funds Project MAC

for A.I. at the MIT (1963) and Project Genie for time-sharing at UC Berkeley (1964)

– Bob Taylor (NASA) funds Douglas Engelbart‘s ARC for human-computer interaction at the SRI

– Bob Taylor (DARPA): Arpanet (1966)– Project MAC and the Arpanet further increase

Boston's lead over the rest of the nation

www.scaruffi.com51

Integrated Circuits

• Exponential growth in chip density – Frank Wanlass at General Microelectronics (1964):

CMOS, i.e. low power consumption, low heat and high density (i.e. semiconductors into digital watches and pocket calculators)

– Lee Boysel at Fairchild (1966): four-phase clocking technique to create very dense MOS circuits

– Federico Faggin at Fairchild (1968): silicon-gated MOS transistors (faster, smaller and low energy)

• Gordon Moore’s law (1965): the processing power of computers will double every 12 (18) months

www.scaruffi.com52

Integrated Circuits

• Fairchild spinoffs: Amelco (Jean Hoerni), Molectro (James Nall), General Microelectronics (Don Farina), Intersil (Jean Hoerni); AMD (Jerry Sanders ), etc

• Texas Instruments, Motorola and RCA do not spawn a similar genealogical tree of spinoffs

• A self-sustaining manufacturing community that mixes Darwinian competition/selection with symbiotic cooperation

• The system exhibits a form of collective learning • Few of the companies that had thrived in the age of

microwave electronics survive to the age of the integrated circuit

www.scaruffi.com53

Integrated Circuits

• Role of the government– The military serves as both a munificent venture

capitalist that did not expect a return (and not even co-ownership) and as an inexpensive testbed

– NASA's Apollo mission to send a man to the Moon builds the Apollo Guidance Computer (1961-64), the first computer to use integrated circuits

www.scaruffi.com54

Culture

• San Francisco Mime Troupe (1959)• Peter Voulkos’ Funk Movement in ceramic sculpture

(1959)• Canyon Cinema (1961) • Tape Music Center (1962)• Esalen Institute (1962)• Pop Art at UC Davis (1960• First public showing of computer art (San Jose, 1963)• The Ali Akbar College of Music (1967)

www.scaruffi.com55

Culture

• SLAC (1962), the longest linear accelerator in the world

• Stanford Artificial Intelligence Laboratory (1963)

www.scaruffi.com56

Society• Free Speech Movement (1964)• Ken Kesey’s Merry Pranksters (1964)• First hippie festival (1965)• The Diggers (1966)• The "Summer of Love" (1966)• Black Panther Party (1966)• Monterey’s rock festival (1967)• Stewart Brand’s "Whole Earth Catalog“ (1968)• The hippie phenomenon further increases immigration

from other states • All these movements are hostile to technological progress

www.scaruffi.com57

Society

• The Immigration Act (1965) greatly increases the quotas of immigrants allowed from various countries and allows immigration based on rare skills, such as software or hardware engineering

• Only 47 scientists immigrate to the USA from Taiwan in 1965, but in 1967 the number is 1,321

• Brain drain of engineers and scientists from Europe and especially the Far East towards the Bay Area

www.scaruffi.com58


• IBM’s System/360 (1964), a family of computers that are software-compatible and modular (the first “mainframe” computer), derived from the military Project Stretch (1956-61)

• The seven dwarfs: Burroughs in Detroit, Sperry Rand in New York (Univac , ERA, etc), Control Data in Minneapolis, Honeywell in New Jersey, NCR, General Electric and RCA in New York

• The "bunch": Burroughs, Univac, NCR, Control Data Corporation, and Honeywell

www.scaruffi.com59


• New businesses– Software companies in Texas: EDS

(outsourcing) and Uccel (the packaged product TMS)

– Tymshare (1964) offers time-sharing services in Cupertino

www.scaruffi.com60


• Small computers– DEC’s PDP-1 (1960), an MIT spinoff funded by

venture capitalists– SDS’ 910 (1962), a Packard-Bell spinoff funded by

venture capitalists– DEC’s PDP-8 (1965) that uses integrated circuits– Olivetti’s P101 (1965), a programmable electronic

desktop computer– Texas Instruments’ hand-held calculator (1967)– First computer manufacturer of the Bay Area: Hewlett-

Packard, but their calculators are simply a natural evolution of an instrumentation product line

www.scaruffi.com61

Dynamic Memory

• Advanced Memory Systems (1968), Intel (1968) and Four Phase (1969): semiconductor computer memories instead of magnetic core memories

• Before the DRAM: the semiconductor firms make money by building custom-designed integrated circuits (small market but lucrative)

• The DRAM: a commodity sold in large numbers at a low price

• Constant downward pressure on prices• Intel’s i1103 is the first bestseller of the DRAM

www.scaruffi.com62

High-tech Creativity

• SRI– Doug Engelbart’s NLS (1968): a graphical user

interface and a hypertext system running on the first computer equipped with a mouse and connected to a remote computer

– "Shakey the Robot“ (1969)

www.scaruffi.com63


• Xerox PARC (1970) – Alan Kay’s Dynabook and Smalltalk– Not faster computation but better interaction– Casual, informal and egalitarian workplace– The equivalent for a workplace of the alternative

lifestyle preached by the hippies

www.scaruffi.com64


• Computer manufacturers– IBM Western Labs’ floppy disk (1971): a cheap

storage medium to load the 370 mainframe's microcode and replace the cumbersome tape units

– HP/3000 (1972): one of the first computers to be completely programmed in a high-level language instead of assembly language

– The PDP of DEC had introduced a "do-it-yourself" mindset in data centers. The HP/3000 pushed that mindset one floor up to the business offices.

– Amdahl (1975): cheaper IBM-compatible mainframes

www.scaruffi.com65


• Computer games– Nolan Bushnell’s "Computer Space“ (1971): a

free-standing terminal powered by a computer – Atari’s “Pong“ (1972)

www.scaruffi.com66

Life Sciences

• Alejandro Zaffaroni’s Alza (1968): biomedical industry• Cetus (1971), the first biotech company of the Bay

Area (to develop methods to process DNA)• Paul Berg's team at Stanford University synthesizes

the first recombinant DNA molecule (1972)• Stanley Cohen (Stanford) and Herbert Boyer (UCSF)

transfer DNA from one organism to another, creating the first recombinant DNA organism (1973)

www.scaruffi.com67

Labor Fluidity

• California is blessed with an economy which mostly outperforms the rest of the USA

• California is an employee's market and not an employer's market

• California’s law code forbids any labor contract that limits what an employee can do after quitting

• Silicon Valley engineers exhibit a preference for horizontal instead of vertical mobility, for hopping from job to job instead of following a career of promotion after promotion

• Staying with the same company for more than a few years does not look "good" on a resume

www.scaruffi.com68

Labor Fluidity

• Job turnover and no protection for trade secrets foster an endless flow of knowledge throughout the community\spread

• Pervasive job mobility spreads knowledge quickly and efficiently

• Rapid dissemination of knowledge within an industry across companies, as well as in cross-fertilization of ideas across research groups.

• Status symbol of being an engineer like in no other region in the world (second to the status symbol of being an entrepreneur)

www.scaruffi.com69

Society

• Ronald Reagan’s era (1967-75): the age in which citizens revolt against big government and taxation

• Post-hippy grass-roots environmentalist movement (Garrett Hardin’s article "Tragedy of the Commons“)

• Man and his Environment conference (1968)• "Earth Day“, a new international holiday (1970)• The Reagan-ite establishment pressed to curb public

spending and the environmentalist movement pressed to curb the infrastructure boom on almost opposite ideological grounds

www.scaruffi.com70


• Arpanet• Unix• Remote Computing• The Unbundling

www.scaruffi.com71


• The Arpanet (1969): four nodes, three of which are in California (UCLA, SRI and UC Santa Barbara) run by BBN in Boston

• Unix: – Bell Labs’ successor to the MULTICS time-sharing

operating system (1971)– Rewritten in C, it can be easily ported across

computers (1973)– AT&T is forbidden to enter the computer business

and forced to share any non-telephone invention with the whole world

– The Unix becomes a worldwide phenomenon

www.scaruffi.com72


• Remote Computing– IBM’s transactional system CICS for real-time

transactions (1969)• The Unbundling

– Before the unbundling only SDS had charged customers for software

– IBM forced to unbundle the application program of its mainframes (1969)

– Free market for software applications – Software companies shift from the consulting business

of custom applications to selling off-the-shelf packages

www.scaruffi.com73


• Britain – Britain had the know-how (it had pioneered computers)– National long-term plan (NRDC)– Britain's computer industry self-destroyed within two

decades• Japan

– Japan was experiencing the most spectacular economic boom in the world

– National long-term plan (MITI)– Japan created a vibrant computer industry within the

existing conglomerates (Fujitsu, Hitachi, NEC)

www.scaruffi.com74

The Microprocessor

• Four Phase Systems’ AL1 (1970) • Intel’s 4404 (1971), as powerful as the ENIAC, but

millions of times smaller and ten thousand times cheaper

• Intel's motivation to make microprocessors: microprocessors helped sell more memory chips

• Bill Pentz at California State University in Sacramento proves that a microprocessor can be used to build a computer (1972)

• Intel’s 8080 (1974) lowers both the price and the complexity of building a computer while further increasing the power (290,000 instructions per second)

www.scaruffi.com75

The Microprocessor

• MITS of New Mexico builds the first calculator to use the Intel 8008 (1971)

• Hewlett-Packard, Texas Instruments, Casio and Commodore debut small calculators (1972)

www.scaruffi.com76

The Home Computer

• "Radio Electronics", "QST" and "Popular Electronics" publicize the microprocessor among hobbyists

• Kits by mail-order for hobbyists to build machines at home: Scelbi (1974), …, Altair 8800 (1974)

• The microprocessor reaches a wider audience than its inventors intended to reach thanks to the magazines

• The most creative and visionary users are not working in corporations but at home

• The Homebrew Computer Club (1975)

www.scaruffi.com77

The Home Computer

• IBM, the "BUNCH“ and DEC had the know-how, the brains and the factories to produce desktop computers for the home market. They did not do it.

• The market for home computers is largely created by a grassroots movement of hobbyists who work outside the big bureaucracies of corporations, academia and government.

• They create their own community (via magazines, stores and clubs)

• Another Bay Area community of counterculture• Journalists and store owners are the real visionaries

www.scaruffi.com78

The Home Computer

• Obstacle to widespread diffusion: the home computer is expensive (because the Intel microprocessor is expensive) and pretty useless (because it has no software)

www.scaruffi.com79

Venture Capitalists

• The center of mass for venture capital shifts from San Francisco towards Menlo Park

• Kleiner-Perkins (1972), Sequoia Capital (1972), Mayfield Fund (1974), etc

www.scaruffi.com80

The Microprocessor Wars

• Microprocessors drive sales of memories, and sales of memories fund improvements in microprocessors

• AMD introduces the AMD8080, a reverse-engineered clone of the Intel 8080 (1975)

• Zilog (1976)

www.scaruffi.com81

Databases

• Leadership in database technology: IBM’s IMS• IBM's Almaden Research Center starts the

“relational” database management system System R (1973)

• Berkeley’s Ingres (1973)

www.scaruffi.com82

The GUI

• Leadership in user interface: IBM’s form-driven 3270 terminal to connect to mainframes

• Xerox PARC unveils the Alto, the first workstation with a mouse and a Graphical User Interface (1973)

www.scaruffi.com83

Culture

• Video art, performance art, participatory installations, mixed media, live electronic music

www.scaruffi.com84

Society

• "Gay Pride Parade" (1970)• The Castro district becomes the center of gay life

www.scaruffi.com85

The Apple Vision

• Apple I vision (1976): – A computer without a programming language is an

oxymoron – A real programming language requires DRAM – Enabling technology: the 4K DRAM, just introduced in

1974, much cheaper than the static RAM of the Altair– Roberts had basically just dressed up a

microprocessor to create his Altair. Wozniak dresses up a memory chip to create the Apple I

– Wozniak also writes the BASIC interpreter – Target user: the hobbyist

www.scaruffi.com86

The Apple Vision

• Apple II vision (1977): – Funded by Mike Markkula– Fully assembled, with a monitor and a keyboard,

requiring almost no technical expertise– The look and feel of a home appliance– The first affordable floppy-disk drive for personal

computers, which replaces the cassette as the main data storage

– Still no operating system

www.scaruffi.com87

Low-cost Microprocessors

• The Motorola 6502 generation– Apple I (1976)– Commodore PET (1977)– Atari 800 (1978)– Acorn

• The Zilog Z80 generation– Tandy/Radio Shack's TRS-80 (1977)

• The companies that miss the train are the ones that dominated the market for calculators: Texas Instruments, Hewlett-Packard

www.scaruffi.com88

A New Office Tool

• VisiCalc (1979), the first spreadsheet program for personal computers for the Apple II

• Apple’s IPO (1980) raises a record $1.3 billion• Visicalc ported to the Tandy TRS-80, Commodore

PET and the Atari 800, the first major application that is not tied to a computer

• Lesson learned: the value of software

www.scaruffi.com89

The Microprocessor Wars/ II

• Intel assigns the task of designing the 8086 (1978) to a software engineer

• The 16-bit microprocessor– Intel’s 8088 (1979)– Motorola’s 68000 (1979)– Zilog’s Z8000 (1979)

• 14 million microprocessors are sold in 1978 but only 200,000 personal computers are manufactured

www.scaruffi.com90

Data Storage

• Alan Shugart’s smaller floppy-disk (1976)• Seagate’s 5Mbyte hard-disk drive for personal

computers (1980)• Tandem (1976): fault-tolerant machine for mission-

critical transactions

www.scaruffi.com91

Databases/ II

• Oracle (1977): an SQL relational database management system

• Ingres (1979), an open-source variant of IBM's System R for DEC minicomputers running the Unix operating system

• The relational database startups do not target the huge market of mainframe computers but the smaller market of minicomputers

• IBM's IMS dominates the database market for mainframe computers and IBM fails to capitalize on the System R developed at its Almaden labs until 1983 (DB2)

• Oracle rewrites its DBMS in C for Unix (1983)

www.scaruffi.com92

Communications

• 3Com (1979): Ethernet for personal computers• Ungermann-Bass (1979): Ethernet-based local-area

networks

www.scaruffi.com93

The GUI/II

• Exodus of brains from Xerox PARC towards Silicon Valley companies (1977)

• Xerox 8010 Star Information System (1981) that integrates a mouse, a GUI, a laser printer, an Ethernet card, an object-oriented environment (Smalltalk) and word-processing and publishing software.

• Artificial Intelligence: Intellicorp (1980)

www.scaruffi.com94

BSD

• Unix ethics and philosophy a good match for the Bay Area’s utopian ideology

• Berkeley Software Distribution (1977) spreads in universities

• The world's most portable operating system• Onyx (1980), Apollo (1980), SUN (1981), Silicon

Graphics (1982): a microcomputer running UNIX, a cheaper alternative to the PDP-11

• Santa Cruz Operation (1979), the first Unix consulting company

• DARPA chooses Unix for the Arpanet (1980)

www.scaruffi.com95

BSD

• A technology ignored by the big computer manufacturers and left in the hands of a community of eccentric independents

• Counterculture dynamics that mirrors the dynamics of the computer hobbyists who have invented the personal computer

• Universities serve as community aggregators more than magazines, clubs or stores

www.scaruffi.com96

The Moral Tale

• Government funding (from the 1910s till the 1960s) accelerated innovation whereas large computer corporations in the 1970s de facto connived to stifle innovation

www.scaruffi.com97

The Moral Tale

• The Visible Hand of Capital– The amount of money available to venture

capitalists greatly increases after the Apple IPO– For several years Kleiner-Perkins is able to pay a

40% return to the customers of its high-tech fund

www.scaruffi.com98

The Moral Tale

• The Invisible Hand of Government– The US government reduces the capital gains tax

rate ("Revenue Act“, 1978)– The US government eases the rules on pension

funds (1979)– Silicon Valley’s high-tech industry benefits from

computer-based military projects: the B-2 stealth bomber, the Jstars surveillance system, the Global Positioning System (GPS), the Trident submarine and the Tomahawk cruise missile.

www.scaruffi.com99

Biotech

• Genentech (1976) to genetically engineer new pharmaceutical drugs

• DNA sequencing invented in Britain (1977)• Applied Biosystems (1979) to build biotech

instrumentation (protein sequencer, DNA synthesizer)

• The US Supreme Court rules that biological materials (as in "life forms") can be patented (1980)

• Calgene (1980), Chiron (1981), …• Cetus’ IPO (1981) raises a record $108 million

www.scaruffi.com100

Culture

• Music: new wave and punk-rock vs new-age music• George Coates’ multimedia theater group

Performance Works (1977)• Survival Research Labs (1978)

www.scaruffi.com101


• The IBM PC (1981), a personal computer from off-the-shelf, widely available components based on the Intel 8088 microprocessor and running an operating system by Microsoft (derived from Unix)

• The “open” model of the PC creates an industry of "clones" (Compaq, Olivetti) and an industry of independent software companies

• Commodore 64 (1982) is sold in retail stores instead of electronics stores

• Osborne 1 (1981), a portable computer designed by hardware engineer Lee Felsenstein of the Homebrew Computer Club

www.scaruffi.com102

The Apple Vision/ II

• Apple (1982) is the first personal-computer company to pass the $1 billion mark in revenues

• Apple’s model: a proprietary Apple operating system • Apple Lisa (1983), the first personal computer with

the GUI pioneered by the Xerox Alto• Apple’s added value: it looks cool

www.scaruffi.com103

Software

• Sales of personal computers skyrocket because they have become useful: Apple thanks to office programs (Visicalc, Context MBA) and the PC thanks to the DOS-compatible applications (Lotus 1-2-3, dBase ($700)

• Activision (1979), Electronic Arts (1982): computer games

• Autodesk (1981): CAD• Adobe (1982): desktop publishing• Symantec (1982), Borland (1983): tools for software

developers

www.scaruffi.com104

Software

• 1950s-1970s: the hardware represents most of the cost of a computer

• 1980s: the falling prices of hardware components enables ever more sophisticated software applications and triggers a growing demand for them; and the need to run more sophisticated applications motivates the hardware industry to produce more powerful chips

www.scaruffi.com105

Workstations

• Single-user graphic networked computer for engineering applications

• Mostly based on the Motorola 68000 (not on Intel) and running Unix (not DOS)

• Apollo (1980), SUN (1982), Silicon Graphics (1982), DEC and Hewlett-Packard (1983)

• Apollo (Boston): custom hardware and proprietary operating system

• SUN (Stanford): Berkeley’s Unix running on standard off-the-shelf hardware components (the business model of the IBM PC)

• The SUN culture is to the Microsoft culture what the counterculture is to the mainstream

www.scaruffi.com106

Workstations

• Corporate networks of local networks– Cisco’s commercial version of Stanford’s router

(1986)

www.scaruffi.com107

Diversifying

• Fairchild, Intel, Zilog created a genealogical tree: each one improved over the invention of the predecessors

• The inventions of Apple, Cisco, SUN and Oracle have little in common

• Neither of them gives rise to a (significant) genealogical tree

• No major company of the size of Intel emerges from any of these

• Each of them creates a chain of suppliers

www.scaruffi.com108

The Great Unix Wars

• The US government allows AT&T to sell its Unix, System V (1983)

• AT&T's corporate world versus the idealistic Bay Area hobbyists (SUN)

• Open Software Foundation (1988): IBM, DEC, Hewlett-Packard, etc

• Meanwhile Microsoft keeps increasing its market shares…

www.scaruffi.com109

The Internet

• Just like the personal computer and the Unix, the Internet too was largely shaped by a community of eccentric independents

• Decentralized model that involves the very users of the Internet to submit proposals for future directions

• A government-mandated grass-roots movement• The consumer is the producer• E-mail itself is a user invention, never planned by the

Arpanet's bureaucracy

www.scaruffi.com110

The Internet

• The Arpanet as a project in progress, a concept that is more likely to be accepted in military projects than in commercial product development

• The Arpanet changes mission over time, transforming from a military project to survive a nuclear attack into a system for interpersonal communication and knowledge sharing

• The ethics of the Arpanet, just like the ethics of the Unix world and the ethics of the early personal-computer hobbyists, is not the brutal, heartless ethics of the corporate world nor the brutal, heartless ethics of Wall Street: it is the utopian ethics of the hippie communes transposed into a high-tech environment

www.scaruffi.com111

Society

• Spiritual revival of the New Age– Arguing for a return to a more natural way of life– Hostility towards science and rationalism– Luddites vs tecnophiles

www.scaruffi.com112

Society

• Chinese and Indian executives run 13% of Silicon Valley's high-tech companies founded between 1980 and 1984

• Silicon Valley is both a place of great ethnic diversity and a place of high technological saturation

www.scaruffi.com113

Society

• Chaotic creation and destruction of companies• High labor mobility• Anti-union spirit• The decentralized and anarchic personal-computer

world is a good fit for the spirit of the Bay Area

www.scaruffi.com114

Apple’s Vision/III

• Apple’s Macintosh (1984) • The hardware is a means to appealing software• Microsoft cannot match Apple’s GUI because it

cannot tweak the hardware of the PC • Apple’s HyperCard (1987)• However, Microsoft can invest more in marketing its

office automation suite (Word, Excel, Powerpoint)• The futuristic Mac helps cement the community of

Apple fans• But Apple’s closed architecture loses to the "open

architecture" created by the IBM-Microsoft axis

www.scaruffi.com115

The GUI

• Virtual Reality– NASA’s VIVED (1984) and VIEW (1985)– Jaron Lanier’s VPL Research (1985)– Lucasfilm’s virtual world "Habitat“ (1986)

www.scaruffi.com116

The Semiconductor Wars

• Japanese firms introduce low-cost 256K DRAM chips (1984) and gain 70% of the market (1985)

• Intel, AMD and Fairchild exit the DRAM market• Japan's share of the world's semiconductor market

reaches 51% (1986)• First large-scale layoffs in Silicon Valley• What saved Intel is the microprocessor. The

"computer on a chip" is too complex and required too big a manufacturing investment to be handled like a commodity

www.scaruffi.com117

Intel’s Vision

• The real competitors are at home: VLSI Technology, Linear Technology, LSI Logic, Cypress Semiconductor, Maxim, Altera and Xilinx

• New corporate culture: a brutal philosophy of Darwinian competition ("Only the paranoid survive") and iron discipline

www.scaruffi.com118

Outsourcing the Fab

• 1985: The government of Taiwan hires Morris Chang who promotes the outsourcing of semiconductor manufacturing by US companies to Taiwan

• “Fab-less" semiconductor companies of Silicon Valley: Chips and Technologies, Xilinx, Cirrus Logic, Adaptec…

• Whenever a Silicon Valley manufacturer outsources a project to a Taiwanese fab, it directly improves the Taiwanese plant both by injecting capital and by the project's new requirements and therefore does a favor to its own competitors who can use the same factory

www.scaruffi.com119

SUN’s Vision

• SUN erodes DEC's supremacy in the academia and then in the engineering market

• The DEC generation believed that a company needed to personally make the key components

• The SUN generation believes that key components ought to be delegated to specialty shops

• In-house development is unlikely to match "best of breed" quality across the board by specialized shops

• The pace of innovation rewards SUN over DEC• This model creates a secondary economy in Silicon

Valley of large hyperspecialized companies that don’t become household

www.scaruffi.com120


• Dell (1984): custom PC-compatible computers sold directly to the customer by mail order (almost a return to the business model of the early hobbyists) thanks to an automated supply-chain system that removes the need for inventories ("made to order“)

• Both Dell and Compaq owe their success more to a distribution strategy than to a technological breakthrough

www.scaruffi.com121


• Japan– Nintendo launches the videogame console

Nintendo Entertainment System (1983)– Sony introduces the CD-ROM for data and music

storage (1984)– Toshiba invents flash memory (1984)– Toshiba (1985) enters the market of the IBM-

compatible laptops

www.scaruffi.com122


• Distributed computing– The client-server architecture as a cheaper

alternative to the monolithic mainframe– Groupware to make personal-computer users to

work as a team • Novell’s network operating system NetWare for

DOS was the first stepping-stone – Dedicated online services for personal computers

• CompuServe, America Online (1985)

www.scaruffi.com123

The Peacetime Dividend

• End of the Cold War: Silicon Valley does not depend anymore on the military industry

• Building chips is a high-risk business: huge capital investment, very short lifespan of the product, price wars

• The reward: the survivors dominate the most important industry of the era

• The semiconductor industry creates a culture of risk that spreads to the software industry

www.scaruffi.com124


• The culture of risk is a whole infrastructure designed to promote, assist and reward risk-takers in new technologies (laboratories, plants, offices, corporate lawyers, marketing agencies, venture capitalists, universities, immigrants)

• The main change: need to generate a profit as quickly as possible (the great investor of the 1950s and 1960s, the military, thought long-term, with no interest in return on investment)

• The venture-capital firms create a ghost industry (focused on making money) that evolves in parallel to the technological one

www.scaruffi.com125


• The short-term approach helps communicate effectively with the market.

• The Silicon Valley start-up is both "visionary" AND grounded in the reality of technological feasibility and of market readiness

• The Darwinian system of small start-ups as a whole is more likely to find a solution to a problem than a large bureaucratic company

• Progress is incremental, but rapid

www.scaruffi.com126


• Europe and East Coast: the goal is a lifetime career in a large, safe company

• Silicon Valley: a company's life expectancy is low• The goal is to change jobs hoping to hit the jackpot• Silicon Valley's dream is a linear progression from

engineer in a start-up to founder of a start-up to investor in a start-up

• This dream encourages people to take chances working for a start-up, to take chances creating start-ups, and to take chances investing in start-ups

www.scaruffi.com127


• Venture capitalists employ or are themselves technology specialists

• The venture capitalist becomes a knowledge broker, helping shape companies and their businesses through her/his network of contacts

www.scaruffi.com128


• The leaders of Apple, Oracle, Intel and SUN acquire semi-god status

• They fight epic battles (e.g. against Microsoft) • Their charisma replaces the charisma of the

engineers who had truly invented their technologies (Faggin, Wozniak, Bechtolsheim…)

• The trend shifts from inventing a product to starting a company

www.scaruffi.com129

Geopolitical Implications

• Historical shift in political and economic power from the old industrial and financial capitals of the Northeast and Midwest towards a new pole of industry and finance based on the West Coast

• The biggest competitor of California is Japan, not Western Europe

• The old "Atlantic" economy is being replaced by a new "Pacific" economy

www.scaruffi.com130

Society

• Search For ExtraTerrestrial Intelligence Institute (1984)• The WELL (1985), a virtual community of computer

users structured in bulletin boards for online discussions (social networking ante-litteram)

• The "Whole Earth Review“ (1985) introduces Virtual Reality, the Internet and Artificial Intelligence to the masses of Silicon Valley hackers

• "Burning Man" (1986)• "Burning Man", born out of a counterculture that

reacted against what Silicon Valley represents, is an appropriate metaphor for what Silicon Valley is

www.scaruffi.com131

Society

• The population of San Jose passes San Francisco’s• Menlo Park replaces San Francisco as the financial

center for the high-tech industry• The new billionaires build mansions in the Peninsula

instead of San Francisco

www.scaruffi.com132


• 1988: Bellcore invents DSL that allows every household to use the existing phone line to establish a high-speed connection with a computer

• 1987: U.S. Robotics unveils a 9600-baud modem ($1,000)

• 1987: Uunet, the first independent ISP• Anybody willing to purchase a modem can get on the

Internet• 1989: CompuServe enables its customers to

exchange e-mail with Internet users • 1991: Tim Berners-Lee invents the World-wide Web

www.scaruffi.com133


• 1991: The US government enacts the “High-Performance Computing and Communication Act”

• 1993: Mosaic (funded by the “High-Performance Computing and Communication Act”), later renamed Netscape in Silicon Valley

• 1994: WebCrawler (search engine)• 1995: The US government blesses the commercial

use of the Internet

www.scaruffi.com134

The Dot Coms

• The importance of Netscape’s browser:– Free for ordinary users– Illiterate computer uses can browse the Web the

same way that a pro does– The non-intuitive cluster of digital information that

has accrued on the Internet becomes intelligible to ordinary people

– More and more people are motivated to add content to the Web

www.scaruffi.com135

The Dot Coms

• The importance of Netscape’s browser:– The personal computer boom of the 1980s

has placed a computer in millions of households and the browser turns them into the audience of the Web

– The computer monopolies are forced to adopt open standards for the Web

www.scaruffi.com136

The Dot Coms

• Netscape IPO (1995)• Yahoo (1995)• Excite. AltaVista (1995), Hotbot (1996), Google (1998)• Java (1995)• WebLogic (1995), Apache (1996)• Craigslist (1995)• HotMail (1996)• GeoCities (1995)• eBay (1995)• Netflix (1997)

www.scaruffi.com137

Hotmail’s Lesson

• Founded by hardware engineers: a user’s idea, not a technological idea; a sturdy no-nonsense "product“

• Advertising as a source of revenues• Internet startups offer free services because their real

product is the user base• The boom of the Web is not a consequence of the

Internet but of the boom in advertising: cable television revenues stage an 82% growth rate in 1994-95 just when the Web is maturing

www.scaruffi.com138

Connecting the World

• Beneficiaries of the age of networking: Cisco, 3Com and Bay Networks

• Fiber-optic boom• Overcapacity dramatically lowers the cost of

broadcasting information, thereby increasing the motivation to broadcast information

• The fiber-optic rush creates on the Internet the equivalent of the freeway system created by the US government in the 1950s

• The vast fiber-optic infrastructure connects the USA to India too, thus accelerating the process of outsourcing IT jobs to India

www.scaruffi.com139

The Mobile World

• General Magic (1990) to put the power of a real computer into the hands of a casual mobile user connected to a “cloud” of services

• Apple Newton (1993): a pen-based tablet computer with software for handwritten recognition

• Apple QuickTake 100 (1994): the first camera that can download images into a personal computer

• SoftBook Press ebook reader (1996)• Palm Pilot (1996)

www.scaruffi.com140


• Finland implements a GSM network for mobile computers (1991)

• Nokia introduces SMS (1993)• Linux (1991) • Nokia's 9000 Communicator (1996), the smartphone• The "Telecommunications Act" allows cable television

providers to offer Internet services (1996)• MapQuest’s mapping software (1996)• SixDegrees’ social networking software (1997)• The Y2K Bug (1999)• Napster (1999)

www.scaruffi.com141


• Human Genome Project (1992)

www.scaruffi.com142

The Nasdaq Crash

• Between 1998 and 1999 venture-capital investments in Silicon Valley firms increases more than 90%

• The Internet and Y2K booms generate a bubble that bursts in 2000

www.scaruffi.com143

The Nasdaq Crash

• Silicon Valley before the bust:– Personal computers: HP and Apple dwarfed by

IBM, Compaq, Dell and Japanese– Videogame consoles: Japan rules– Semiconductors: The Far East rules– Mobile phones: Europe rules– Chips for mobile devices: ARM rules– Software: Microsoft and SAP dwarf Oracle– Dotcoms: No profits

www.scaruffi.com144

Beyond the Crash

• HP acquires Compaq (1999): DEC downgraded to just up a small division within a Silicon Valley company (HP)

• Paypal (2000)• Apple iPod (2001)• Yahoo and Google de-facto turn the Web into an

advertising tool which incidentally also contains information

• Almost all of Google's businesses are driven by acquisition of other people's ideas

www.scaruffi.com145

You Are a Gadget

• Wikipedia (2003)• Intel Centrino makes Wi-Fi a household name (2003)• Facebook (2004)• YouTube (2005)• Twitter (2006)• Kindle (2007)• Zynga (2007)• Apple iPhone (2007) and Google Android (2007)

www.scaruffi.com146

The Age of Uploading

• Wikipedia• Blogs• P2P tools• social networking sites • YouTube• Flickr • Digital cameras and camcorders• Smartphones

www.scaruffi.com147

The Demise of the Computer

• The smartphone (a computer that also does voice)

• Cloud computing (an invisible, omnipotent, virtual computer)

• Applications are written for social networks (Facebook apps) and smartphones (iPhone apps), not for an operating system

www.scaruffi.com148

The Gift Economy

• The audience “gifts” content to the companies that make money out of it

• The companies are small but handle a huge amount of content

• The companies make money as advertising platforms

• The audience receives a free service but also provides a free service

www.scaruffi.com149

The Great Internet Wars

• Google vs Microsoft: Microsoft owns the operating system but Google owns the search engine (Internet traffic)

• Google vs Facebook: vying to become the premier advertising platform

• Apple vs Google: proprietary or open smartphones

www.scaruffi.com150

The Empire

• The Bay Area is the largest high-tech center in the world (2006)

• HP passes Dell in worldwide PC shipments (2006)• Google's revenues pass IBM's software revenues (2009)• Oracle passes SAP (2009)• Facebook grows by about one million users a day (2009)• Apple's market capitalization passes Microsoft's (2010)

and becomes #1 in the world (2011)• The Bay Area has won more Nobel prizes than any

country except USA, Britain and Germany

www.scaruffi.com151

The Future

• The one-man startup• Advertising vs privacy

www.scaruffi.com152

Biotech

• Elsewhere:– Celera and HGP announce the human genome has

been sequenced (2000)– Stony Brook creates the first synthetic virus (2002)– Craig Venter creates an artificial being (2010)

• Silicon Valley:– The world's first Synthetic Biology department at the

Lawrence Berkeley Lab (2006)– UCSF Institute for Human Genetics (2005)– The Bay Area boasts about 700 biomedical companies

(2007)– Bubble of Personal Genomics startups

www.scaruffi.com153

Greentech

• Solyndra (2005)• The Tesla roadster (2006)

www.scaruffi.com154

The Unlikely Symbiosis (1900s-70s)A brief technological and sociopolitical history of Silicon Valley

Far WestUtopians/Independents

Mining & Damming

Ship comm-unications


Radio Engineering

Nuclear Engineering

Big ScienceBerkeley

Stanford

Hobbyists

WWII

Startups

Terman Startups

DefenseIndustry

Transistor

IntegratedCircuit/ Microprocessor

Hippies

PC

Unix

Internet

Immigration

Startups

GUI

Venturecapitalists

www.scaruffi.com155

The Unlikely Symbiosis (1970s-2010s)A brief technological and sociopolitical history of Silicon Valley

PC

Unix

Internet

Immigration

Softwareindustry

Dotcoms

DBMSERP

Graphics

GUIGames

CommunicationsVenturecapitalists

Hardwareindustryr

Fablessindustry

Workstations

PersonalDigitalDevices

Virtualization/cloud

www.scaruffi.com156

Conclusions

• Silicon Valley is the symbol and catalyst for the revolution that turned electronic computing from a math appliance into pervasive worldwide communication

• Almost none of the enabling technologies was invented by Silicon Valley

• SV excels at incubating businesses, not at inventing technology

• SV excels in disruptive technologies (that change the world)

• A platform for perennial innovation

www.scaruffi.com157

Conclusions

• Silicon Valley did not exist in a vacuum: sociopolitical and artistic/cultural background

• Alternative lifestyle, anti-establishment spirit, utopian counterculture: "question authority", "think different" and "change the world"

• SV is largely the product of a youth culture (just like rock music and videogames)

• SV hates the big government, big labor and big corporations

• SV loves the eccentric individualist and the "do it yourself" philosophy

www.scaruffi.com158

Conclusions

• The Bay Area was uniquely equipped with the mindset to subvert rules and embrace novelty

• But it would not have happened without big government:– government was the largest venture capitalist of

Silicon Valley– government was also the most influential strategist

of Silicon Valley– government invested in high-risk long-term

projects while venture capitalists tended to follow short-term trends

www.scaruffi.com159

Conclusions

• Homework for you: why did it happen here and not elsewhere, and why it is still not happening anywhere else?

www.scaruffi.com160

Conclusions

• In the book:

a history of silicon valley/ san jose state univ

Travel

san francisco bay area

radio station

pictures of machines

ernest lawrence berkeley

hamradio hobbyists

hamradio amateurs

history of silicon valley

mexicans san francisco