Here’s one thing I didn’t expect to hear from the chief executive officer of one of Europe’s largest tech companies:
“Everything happening today shows you have to be in Silicon Valley to really know what’s going on.”
That was Ben Verwaayen, CEO of Paris-based Alcatel-Lucent, during an interview yesterday at the Santa Clara Marriott, where the company was holding its annual meeting with Wall Street analysts.
“It’s quite amazing to me,” said Verwaayen, who was chief executive of BT Group in 2002 before joining Alcatel-Lucent in 2008. “Three or four years ago, there was all this talk about how the action was going to move to other parts of the world.” For example: China, India and Israel.
Verwaayen doesn’t profess to know how Silicon Valley beat back the latest challenges to its preeminence, but he pointed to several possible factors.
For starters, the center of gravity in the tech world has shifted from traditional enterprise technology (think consultants and IT shops deploying PCs, corporate networks and big apps) to cloud services and mobile devices. Increasingly, data centers run by companies such as Facebook, Salesforce and Amazon (yeah, they’re in Seattle, but that’s close enough) are feeding the digital activities taking place on devices made by Apple or powered by Google’s Android.
Silicon Valley also benefits by being in America, home to the most digitally-obsessed consumers, he said.
Back in the 1990s, Nokia shot to stardom in part because Finns went cellular with abandon. Consumers in Korea and Japan embraced broadband services from carriers such as NTT Docomo in the late 1990s, creating huge markets for companies such as Samsung, LG and Huawei.
Now, America is leading the pack, said Verwaayen. Unlike 2G and 3G, U.S. carriers have been far quicker to move to 4G cellular networks. Consumers’ switch to smart phones has also been quick, compared with other parts of the world. About 63 percent of phones in North America are “smart,” compared to just 19 percent in the Asia-Pacific region, according to a report last November by market research firm Vision Mobile.
“There’s an appetite for innovation by the carriers because the consumer here is absolutely relentless in their demands,” said Verwaayen. “Europe has disappeared to a large extent from an innovation point of view.”
Not everyone agrees. Steve Blank, a lecturer at Stanford and Berkeley, recently told The Atlantic that “Silicon Valley is screwed.” His reasoning centers on venture capitalists’ preoccupation with social networking, which can create great wealth without having to invent any fundamental new technologies.
“Silicon Valley historically would invest in science, and technology, and, you know, actual silicon,” he said.
But to the extent that new technology is being developed, it’s more often than not being created here, said Verwaayen. That includes the hard-core engineers who developed Alcatel-Lucent’s new core router, which was introduced at the meeting.
“An engineer in Silicon Valley costs us 50 percent more than an engineer in Europe, yet we’re still expanding here,” he said. “That tells you something.”