*NEWS*IS SILICON VALLEY SIMILAR 2 DETROIT

[Anonymous]

Is Silicon Valley Similar to Detroit?

(March 05) — HAS the technology
industry – a big and undeniably important slice of the economy – become a
business whose best days are behind it?

In other words, is Silicon Valley turning into Detroit?

That is certainly the way things look now to some industry
observers. They believe that Silicon Valley is destined to see its competitive
stature erode, as new global rivals undercut American technology companies on
price and increasingly wrest the lead from the United States in innovation.

More near-term support for the “graying industry” view of
technology came two weeks ago from Goldman Sachs. The economy may be doing
nicely and corporate capital spending picking up, but it will not help the
technology industry much, according to the investment bank’s survey of corporate
spending plans. In 2005, corporate spending on information technology will rise
less than 4 percent, the Goldman analysts predicted. “Technology looks to be
firmly in the cyclical category for now,” the report stated.

Yet another, somewhat longer, view suggests that America’s
technology industry will not inevitably decline. The more optimistic outlook
rests not on the prospects for Wall Street investors, but on the nature of
information technology.

Computing is an almost infinitely malleable, universal
tool. Software can be programmed to do all manner of tasks. So computing is more
like biology – it evolves – than like traditional industrial technologies such
as steam, electricity and the internal combustion engine.

Information technology moves on, up the ladder of economic
evolution. The PC Forum, an annual gathering organized by the technologist
Esther Dyson, known for her free-ranging and often incisive intellect, provided
a glimpse last week of where the technology is headed. The conference is a kind
of “show, tell and schmooze” for a few hundred industry executives, venture
capitalists and start-ups.

One way new technology is moving ahead is by increasing its
focus on the uses of technology in specific fields, instead of being narrowly
fascinated with the tools themselves. So the technology, Ms. Dyson noted,
becomes interesting to a wider world, beyond “engineers from Silicon
Valley.”

Health care, most specialists agree, is a field where
information technology, if properly used, could help reduce medical errors and
reduce costs. And several companies at the forum were venturing into health
care.

Medsphere Systems is a start-up that hopes to bring the
open-source software formula to hospitals. Fewer than 10 percent of American
hospitals have computerized clinical systems with electronic patient records and
software for tracking their tests, treatments and prescriptions. The current
proprietary systems – produced by Cerner, Epic Systems, McKesson, General
Electric and others – are too costly for many cash-strapped community
hospitals.

Steve Shreeve, Medsphere’s founder, and his brother, Dr.
Scott Shreeve, both did training stints in Veterans Administration hospitals,
which created its own clinical software. The system, called Vista, was developed
with taxpayers’ money, and a Freedom of Information Act request brought
Medsphere a copy of Vista.

Medsphere has rewritten Vista to run on Linux, the popular
open-source operating system. Larry Augustin, a founder of VA Linux, an early
open-source business, joined the company as chief executive earlier this year.
Medsphere has two hospital customers so far. Mr. Augustin says the company’s
target market is community hospitals with 100 to 400 beds. It hopes to sell
support for the open-source software, which is free and being developed and
debugged by a cooperating group of programmers.

“Health care applications like this will be part of the
next wave of open source,” Mr. Augustin said.

Doctors are typically portrayed as hidebound obstacles to
the introduction of information technology. But the experience of Epocrates, a
private Silicon Valley company that supplies software and medical information,
indicates that physicians are not necessarily Luddites, if a technology is
affordable and delivers real benefits.

Epocrates’s software and medical data service runs on
hand-held computers. About 40 percent of physicians use hand-helds, perhaps the
highest adoption rate of any profession. And one in four doctors in the United
States now uses Epocrates, which provides regularly updated information on
diseases, diagnoses, drugs, medical journal research and billing references and
codes from 120 insurance plans.

In surveys, doctors said they saved 11 to 30 minutes a day
using Epocrates instead of having to hunt for information in a file or a medical
reference book. Physicians pay from $30 to $150 a year for Epocrates, depending
on how many services they use. About 20 percent of the company’s daily
information updates sent to doctors are messages paid for by pharmaceutical
companies. But Kirk Loevner, chief executive of Epocrates, said physicians say
they do not mind the ads as long as the sponsored information is clearly
identified.

Another path for technology can be seen in the
proliferation of new services and networks on the Web that are being built,
largely from the ground up, by ordinary people. The information and images – the
content, in media industry jargon – is supplied not by company-paid
professionals but by communities of people who find the data useful. Those
seeking a business in the phenomenon call this information user-generated
content. Photos, event listings, blogs and wikis – Web sites that allow users to
make their own entries – on every imaginable subject are all part of the
trend.

There is mounting evidence that this grass-roots media
hybrid is moving into the mainstream. Ross Mayfield, chief executive of
Socialtext, reports rising demand for his start-up’s expertise in using wikis
among large corporations like Nokia and Kodak. Last week, Yahoo announced that
it had bought Flickr.com, a Web site where people store and share photos. Jerry
Yang, a Yahoo founder, said candidly, “We are venturing boldly, and somewhat
blindly, into this world of user-generated content.”

[Author]

April 1, 2005 at 9:43 AM