Is Battered Silicon Valley Making a Comeback?

Silicon Valley, which was the virtual eye of the storm when the dot-com bubble burst, is in line to make a comeback, but industry analysts say it will never look the same.


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Posted February 17, 2004

Sharon Gaudin

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Silicon Valley, which was the virtual eye of the storm when the dot-com bubble burst, is in line to make a comeback, but industry analysts say it will never look the same.

''What makes Silicon Valley so magical is that you've got all the important things for starting new business -- talent, money and a venture culture,'' says Scot Melland president and CEO of New York-based Dice, Inc., a high-tech job placement company. ''After two years of downtime, all the iffy concepts and iffy companies have been weeded out. There's all this money sitting on the sidelines waiting for a good idea and it's starting to happen.''

When the Internet caught on and dot coms took off, Silicon Valley was the place to be. Techies, marketers and business people flooded the Bay Area like it was the second coming of the Gold Rush. Most workers there planned to put in 12- or 16-hour days, seven days a week for the next 10 years and then retire as young millionaires. And thousands, if not hundreds of thousands, of people were on the road to doing just that.

Developers drove sports cars. Apartment rentals in San Francisco went through the roof. Palo Alto became the most expensive city to live in in the whole country. It was a time when the Bay area worked hard, lived off expense accounts and dreamed about technology... and someday buying their own island.

If dot coms were hot everywhere else in the country, they were a rocket ride in Silicon Valley.

But then the bubble burst. Dot coms fell like Dominos and even the tech giants started to struggle. Suddenly the repo man had more work than your average developer. And nowhere was that more true than in Silicon Valley.

But now, three to four years later, industry analysts say the area is looking at a comeback. With that much high-tech talent in one place, it's inevitable, they say. But what will that comeback look like? Will Silicon Valley regain its old shine? Will the businesses that thrive there be completely different?

''A lot of business has gone away in Silicon Valley, but what that leaves behind is a lot of knowledge workers and service workers,'' says David Foote, president and chief research officer of Foote Partners, LLC,, an IT research firm based in New Canaan, Conn. ''Silicon Valley was staffed awfully high, and became the laughing stock of anyone reading the Bureau of Labor statistics. It was the worst place to be. They went through a really violent economic up and down.''


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