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 user 2005-04-01 at 9:43:00 am Views: 109
  • #29668
    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

    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

    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

    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

    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

    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.”