Rocky Times Ahead for Silicon Valley - Page 2

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Coleman also said there's an important difference between green technologies and the computer-related industries that Silicon Valley has traditionally helped drive.

"Clean tech is a negative proposition from a dollar view," he said. "It's not ten times cheaper to run your car on alternative fuel; it's actually more expensive. This isn't like running an Apple versus a VAX."

Rather than enjoying the big IPOs emblematic of the dotcom boom, Coleman said that promising green tech and other companies starting now instead are more likely to be bought by larger companies.

"You can't grow quick enough to compete against the General Electrics," he said.

Where's the "wow"?

With green tech unlikely to pan out, Grundfest added that he was unsure whether the Valley has simply run out of gas when it comes to computer technology innovation.

"What is there that's 'Wow'? It's not personal computers," he said. "Twitter? I'm Twitter-incompatible -- I can't think of anything worth saying in 140 characters."

"It's cute -- I'll give you cute," he added.

But Cassatt's Coleman said he envisions a burst of innovation related to social networking, but that it could still take years to play out.

"IT will be turned into a utility, but that will take twenty years," he said. "The platform on top of that is social networking that will let you communicate with any group at any time."

He said that while today's social networks offer a lot of free services, the next phase is figuring out how companies can best monetize it. He envisions a system where consumers will want to readily communicate with vendors.

Coming out on top

After hearing the discussion, which was sponsored by the Churchill Club, one attendee at the event asked jokingly for the quickest way to the roof so he could jump off.

Yet in spite of their doom-and-gloom predictions, the panelists did offer some hopeful comments for a select few companies.

Coleman said some of the Valley's bigger, well-funded players stand to come out of the recession in better shape than before. He said Intel's CEO Paul Otellini once joked that it's a case of "Moore's Second Law" -- "During a downturn, the strong get stronger."

[cob:Special_Report]Coleman's not the only believer in that fictitious maxim, since Intel itself is certainly planning for a robust future. Last week, Otellini announced that the company plans to invest $7 billion over the next two years in building advanced manufacturing facilities at three locations in the U.S.

Coleman also gave the Valley a compliment for its dedication to tearing down unprofitable legacy industries in favor of growing businesses -- what he called "the greatest engine of creative destruction the world has ever known."

"We've learned how not to be Detroit," he added.

LogLogic's Sueltz said another lesson the Valley's going to have to learn is how to ship products that provide real value to customers and payback to investors.

In the dotcom boom, there was a rush to get "eyeballs" or visitors to a Web site instead of developing a real business model, she said, adding that she sees some evidence of that pattern today.

"We've got to cast off the 'URL' idea -- Ubiquity first, Revenue Later," she quipped.