Silicon Valley ICT – Software Cluster: Taking a closer look…

Salutations,

Did you know that software is the largest industry cluster in the Silicon Valley with more than 4,500 firms employing 8% of the region’s workforce and accounting for about a third of all venture capital investments? Well it’s true.  After browsing around I found an interesting site that gives a nice rundown of the software cluster in the Valley which includes investments, area of opportunity (both present and future) and cluster infrastructures. Ideas are realized and put into motion by support from a strong infrastructure of incubators, not-for-profit venues, technology associations and networks, S&T parks and several levels of government.  The aforementioned are the culprits in fuelling innovation while making it easier for entrepeneural start-ups to reach their potential by providing funding, advice and support.  I mean ….really… is there a better cluster than the Silicon Valley that ICT Mississauga can compare itself to? I think not…   

The software industry cluster in Silicon Valley includes companies engaged in software programming, testing and architecture as well as companies delivering IT services such as email, web-hosting, and internet services. Increasingly these two components are integrating in the form of value-added “software as a service” where the functionality of software is hosted offsite. Examples of Silicon Valley companies operating in this space include Salesforce.com, eBay and Google.

Software is embedded in the operations of most technology firms in the Valley, ranging from semiconductor design software, to the electronic games industry, software designed for the health and financial services industries, to software used to design medical devices and biomedical instruments.

Changes driving opportunities

• Faster processing at a lower price: The economics underlying the software industry, and especially Information Technology services, continue to be driven by the rapid growth in processing power predicted by Moore’s law. Because software scales easily and the cost of scaling is becoming less expensive as power increases, firms are better able to grow their customer base cheaply.
• Connectivity: High speed connections enable remote services hosting for software applications. Broadband usage is on the rise; about 30% of Bay Area residents have a high-speed connection.
• Outsourcing the IT function: IT staff, especially within large global companies, is shrinking as companies focus on their core competencies. This IT work is being outsourced to giant Lockheed Martin IT, IBM Global Services and HP Services and many other smaller and medium-sized companies.
• On-demand customization: Customer satisfaction is the highest priority. It used to be that the Independent Software Vendor developed expensive, labor-intensive customized solutions for its customers, with software delivered as a service, that functionality is now built in.

Opportunities

Large firms are consolidating as the industry matures. Two examples in the Valley are Oracle’s purchase of PeopleSoft and Symantec’s purchase of Veritas Software. Consolidation of the larger firms leaves ample room for growth especially among small, niche firms throughout the valley. Opportunity areas include:

Wireless: Wireless software applications are a big source of entrepreneurial activities, including mobile games, wireless infrastructure, and WiFi services.

Bioinformatics: software applications enable the convergence of research in the life sciences with information technologies. The California Institute for Quantitative Biomedical Research (QB3) is a cooperative effort among three UC campuses to integrate the study of quantitative sciences and biological systems at all levels of complexity. Berkeley’s Center for Information Technology Research in the Interest of Society (CITRIS) is a new $100 million science and technology center that will focus on the application of IT to bioengineering and bio-informatics. Industry partners, including HP, SUN, Agilent, Intel and IBM, have together pledged $170 million.

Games and game development. The investment community is beginning to invest in the mobile and online games that have taken off in Asia. A big local player is Electronic Arts.

Cluster Infrastructure

SD Forum: The Software Developers Forum is a not-for-profit organization providing a venue for engineers, executives, researchers, technology leaders, and venture capitalists to exchange information on emerging technologies and best practices. More information: http://www.sdforum.org/SDForum/

San Jose Software Business cluster: An incubator for software start-ups and emerging businesses providing entrepreneurs with access to resources, a “know how” network, and shared services.
More information: http://www.sjsbc.org/

Information Technology Association of America: The ITAA is the leading trade association serving the information technology industry. It supports the health, prosperity and competitive nature of the information technology industry, advocating on legislative and regulatory issues, compiling studies and statistics, and promoting the industry nationally and internationally.
More information: http://www.itaa.org/eweb/StartPage.aspx

Software & Information Industry Association: The SIIA is the principal trade association for the software and digital content industry. SIIA provides global services in government relations, business development, corporate education and intellectual property protection to the leading companies that are setting the pace for the digital age. More information: http://www.siia.

http://www.siliconvalleyonline.org/cluster-software.html#firms

                                                        

Till next time….

I W