Santa Clara Valley has emerged from an agricultural past known as "The
Valley of Hearts Delight", into the world's leading high-tech center of
innovation called "Silicon Valley".
Silicon Valley isn’t so much a place as it is an idea. Silicon Valley is a state of mind — borderless, like the Internet. Still, most outside observers agree that the valley has boundaries, albeit fairly flexible ones. It begins in the south around San Jose, then radiates north through such cities as Santa Clara, Sunnyvale, Mountain View, and Palo Alto. The collective brainpower of its residents, universities, and research centers, along with heaps of money from venture capitalists, has made Silicon Valley the innovation capital of the nation, perhaps the world. From the early 1960s right to the present, Silicon Valley has been defined more by the technology and entrepreneurial mindset it cultivates than for its 50-mile geographic limitations. This valley is the major technological center of the world, creating one of the most unique business ecosystems on the planet and the greatest combination of brainpower and wealth the world has ever seen.
Origin of the term
The term Silicon Valley was coined by Ralph Vaerst, a Central California entrepreneur. Its first published use is credited to Don Hoefler, a friend of Vaerst's, who used the phrase as the title of a series of articles in the weekly trade newspaper Electronic News. The series, entitled "Silicon Valley in the USA," began in the paper's issue dated January 11, 1971. Valley refers to the Santa Clara Valley, located at the southern end of San Francisco Bay, while Silicon refers to the high concentration of companies involved in the semiconductor (silicon is used to create most semiconductors commercially) and computer industries that were concentrated in the area. These firms slowly replaced the orchards which gave the area its initial nickname, the Valley of Heart's Delight.
Thousands of high technology companies are headquartered in Silicon Valley; among those, the following are in the Fortune 1000:
Advanced Micro Devices
Maxim Integrated Products
Additional notable companies headquartered (or with a significant presence) in Silicon Valley include (some defunct or subsumed):
3Com (acquired by HP)
Aeria Games and Entertainment
Brocade Communications Systems
BEA Systems (acquired by Oracle Corporation)
Business Objects (acquired by SAP)
EMC Corporation (headquartered in Hopkinton, Massachusetts)
E*TRADE (headquartered in New York, NY)
Fujitsu (headquartered in Tokyo, Japan)
Hitachi Data Systems
Hitachi Global Storage Technologies
IBM Almaden Research Center (headquartered in Armonk, New York)
Maxtor (acquired by Seagate)
McAfee (acquired by Intel)
Memorex (acquired by Imation and moved to Cerritos, California)
Micron Technology (headquartered in Boise, Idaho)
Microsoft (headquartered in Redmond, Washington)
Nokia (headquartered in Espoo, Finland)
Netscape (acquired by AOL)
NeXT Computer, Inc. (acquired by Apple)
Olivetti (headquartered in Ivrea, Italy)
Opera Software (headquartered in Oslo, Norway)
Palm, Inc. (acquired by HP)
PalmSource, Inc. (acquired by ACCESS)
PayPal (now part of eBay)
Philips Lumileds Lighting Company
RIM (headquartered in Waterloo, Canada)
RSA (acquired by EMC)
Redback Networks (acquired by Ericsson)
SAP AG (headquartered in Walldorf, Germany)
Siemens (headquartered in Berlin and Munich, Germany)
Solectron (acquired by Flextronics)
Sun Microsystems (acquired by Oracle Corporation)
Tellme Networks (acquired by Microsoft)
VA Software (Slashdot)
WebEx (acquired by Cisco Systems)
Veritas Software (acquired by Symantec)
YouTube (acquired by Google)
Notable Biotech Companies
Bayer Health Care
Notable Government Facilities
Moffett Federal Airfield
NASA Ames Research Center
Universities and Colleges
San José State University
Santa Clara University
John F. Kennedy University Campbell Campus
University of California, Berkeley Extension
University of California, Santa Cruz Extension
Hult International Business School
Carnegie Mellon University
Golden Gate University Silicon Valley Campus
Silicon Valley University
University of Phoenix San Jose Campus
University of San Francisco South Bay Campus
University of Silicon Valley Law School
San Jose City College
Evergreen Valley College
De Anza College
West Valley College
National Hispanic University
Cogswell Polytechnical College
The Art Institute of California – Sunnyvale
Los Altos Hills
Cities also associated with the region:
East Palo Alto (San Mateo County)
Fremont (Alameda County)
Menlo Park (San Mateo County, location of some venture capital companies)
Newark (Alameda County)
Redwood City (San Mateo County, home to Oracle, Electronic Arts and PDI/DreamWorks)
San Mateo (San Mateo County; YouTube was founded here; home to SolarCity, NetSuite among others)
Scotts Valley (Santa Cruz County, home to Seagate Technology among others)
Since the early twentieth century, Silicon Valley has been home to an electronics industry. The industry began through experimentation and innovation in the fields of radio, television, and military electronics. Stanford University, its affiliates, and graduates have played a major role in the development of this area. A powerful sense of regional solidarity accompanied the rise of Silicon Valley. From the 1890s, Stanford University's leaders saw its mission as service to the West and shaped the school accordingly. At the same time, the perceived exploitation of the West at the hands of eastern interests fueled booster-like attempts to build self-sufficient indigenous local industry. Thus, regionalism helped align Stanford's interests with those of the area's high-tech firms for the first fifty years of Silicon Valley's development. During the 1940s and 1950s, Frederick Terman, as Stanford's dean of engineering and provost, encouraged faculty and graduates to start their own companies. He is credited with nurturing Hewlett-Packard, Varian Associates, and other high-tech firms, until what would become Silicon Valley grew up around the Stanford campus. Terman is often called "the father of Silicon Valley." During 1955-85, solid state technology research and development at Stanford University followed three waves of industrial innovation made possible by support from private corporations, mainly Bell Telephone Laboratories, Shockley Semiconductor, Fairchild Semiconductor, and Xerox PARC. In 1969 the Stanford Research Institute operated one of the four original nodes that comprised ARPANET, predecessor to the Internet.
Social roots of information technology revolution
It was in Silicon Valley that the silicon-based integrated circuit, the [microprocessor], the microcomputer, among other key technologies, were developed, and has been the site of electronic innovation for over four decades, sustained by about a quarter of a million information technology workers. Silicon Valley was formed as a milieu of innovations by the convergence on one site of new technological knowledge; a large pool of skilled engineers and scientists from major universities in the area; generous funding from an assured market with the Defense Department; the development of an efficient network of venture capital firms; and, in the very early stage, the institutional leadership of Stanford University.
Roots in radio and military technology
The San Francisco Bay Area had long been a major site of U.S. Navy research and technology. In 1909, Charles Herrold started the first radio station in the United States with regularly scheduled programming in San Jose. Later that year, Stanford University graduate Cyril Elwell purchased the U.S. patents for Poulsen arc radio transmission technology and founded the Federal Telegraph Corporation (FTC) in Palo Alto. Over the next decade, the FTC created the world's first global radio communication system, and signed a contract with the U.S. Navy in 1912. In 1933, Air Base Sunnyvale, California, was commissioned by the United States Government for use as a Naval Air Station (NAS) to house the airship USS Macon in Hangar One. The station was renamed NAS Moffett Field, and between 1933 and 1947, US Navy blimps were based here. A number of technology firms had set up shop in the area around Moffett to serve the Navy. When the Navy gave up its airship ambitions and moved most of its West Coast operations to San Diego, NACA (the National Advisory Committee for Aeronautics, forerunner of NASA) took over portions of Moffett for aeronautics research. Many of the original companies stayed, while new ones moved in. The immediate area was soon filled with aerospace firms such as Lockheed.
Stanford Industrial Park
After World War II, universities were experiencing enormous demand due to returning students. To address the financial demands of Stanford's growth requirements, and to provide local employment opportunities for graduating students, Frederick Terman proposed the leasing of Stanford's lands for use as an office park, named the Stanford Industrial Park (later Stanford Research Park). Leases were limited to high technology companies. Its first tenant was Varian Associates, founded by Stanford alumni in the 1930s to build military radar components. However, Terman also found venture capital for civilian technology start-ups . One of the major success stories was Hewlett-Packard. Founded in Packard's garage by Stanford graduates William Hewlett and David Packard, Hewlett-Packard moved its offices into the Stanford Research Park slightly after 1953. In 1954, Stanford created the Honors Cooperative Program to allow full-time employees of the companies to pursue graduate degrees from the University on a part-time basis. The initial companies signed five-year agreements in which they would pay double the tuition for each student in order to cover the costs. Hewlett-Packard has become the largest personal computer manufacturer in the world, and transformed the home printing market when it released the first ink jet printer in 1984. In addition, the tenancy of Eastman Kodak and General Electric made Stanford Industrial Park a center of technology in the mid-1990s.
Silicon transistor and birth of the Silicon Valley
In 1953, William Shockley left Bell Labs in a disagreement over the handling of the invention of the transistor. After returning to California Institute of Technology for a short while, Shockley moved to Mountain View, California in 1956, and founded Shockley Semiconductor Laboratory. Unlike many other researchers who used germanium as the semiconductor material, Shockley believed that silicon was the better material for making transistors. Shockley intended to replace the current transistor with a new three-element design (today known as the Shockley diode), but the design was considerably more difficult to build than the "simple" transistor. In 1957, Shockley decided to end research on the silicon transistor. As a result, eight engineers left the company to form Fairchild Semiconductor. Two of the original employees of Fairchild Semiconductor, Robert Noyce and Gordon Moore, would go on to found Intel.
The rise of Silicon Valley was also bolstered by the development of appropriate legal infrastructure to support the rapid formation, funding, and expansion of high-tech companies, as well as the development of a critical mass of litigators and judges experienced in resolving disputes between such firms. From the early 1980s onward, many national (and later international) law firms opened offices in San Francisco and Palo Alto in order to provide Silicon Valley startups with legal services. Furthermore, California law has a number of quirks which help entrepreneurs establish startups at the expense of established firms, such as a nearly absolute ban on non-compete clauses in employment agreements.
Venture capital firms
By the early 1970s there were many semiconductor companies in the area, computer firms using their devices, and programming and service companies serving both. Industrial space was plentiful and housing was still inexpensive. The growth was fueled by the emergence of the venture capital industry on Sand Hill Road, beginning with Kleiner Perkins in 1972; the availability of venture capital exploded after the successful $1.3 billion IPO of Apple Computer in December 1980.
The rise of software
Although semiconductors are still a major component of the area's economy, Silicon Valley has been most famous in recent years for innovations in software and Internet services. Silicon Valley has significantly influenced computer operating systems, software, and user interfaces. Using money from NASA and the U.S. Air Force, Doug Engelbart invented the mouse and hypertext-based collaboration tools in the mid-1960s, while at Stanford Research Institute (now SRI International). When Engelbart's Augmentation Research Center declined in influence due to personal conflicts and the loss of government funding, Xerox hired some of Engelbart's best researchers. In turn, in the 1970s and 1980s, Xerox's Palo Alto Research Center (PARC) played a pivotal role in object-oriented programming, graphical user interfaces (GUIs), Ethernet, PostScript, and laser printers. While Xerox marketed equipment using its technologies, for the most part its technologies flourished elsewhere. The diaspora of Xerox inventions led directly to 3Com and Adobe Systems, and indirectly to Cisco, Apple Computer and Microsoft. Apple's Macintosh GUI was largely a result of Steve Jobs' visit to PARC and the subsequent hiring of key personnel. Cisco's impetus stemmed from the need to route a variety of protocols over Stanford's campus Ethernet.
San Jose State University
Although Berkeley and Stanford provided the historical basis for high-technology growth in the South Bay, and remains at the center of high-technology academic research in Silicon Valley, San Jose State University has emerged as the largest supplier of working engineers to high-technology companies in the region. In this light, SJSU engineering, business and computer science graduates often are viewed as the workhorses that power Silicon Valley from day to day. Former SJSU students and SJSU alumni also have founded or co-founded a number of important high-technology firms, many of which were integral to the commercial growth and development of the region. Included among those companies founded or co-founded by former SJSU students and SJSU alumni are Intel Corporation, Oracle Corporation, Quantum Corporation, Seagate Technology, and Atmel Corporation. SJSU alumni also have risen to the level of CEO and/or senior vice president at numerous high-technology firms in the region including ROLM Corporation, Cisco Systems, IBM, Google and Solectron Corporation. Additionally, Ray Dolby and Charles Ginsburg are two Silicon Valley luminaries with close ties to San Jose State.
Silicon Valley is generally considered to have been the center of the dot-com bubble which started from the mid-1990s and collapsed after the NASDAQ stock market began to decline dramatically in April 2000. During the bubble era, real estate prices reached unprecedented levels. For a brief time, Sand Hill Road was home to the most expensive commercial real estate in the world, and the booming economy resulted in severe traffic congestion. Even after the dot-com crash, Silicon Valley continues to maintain its status as one of the top research and development centers in the world. A 2006 Wall Street Journal story found that 13 of the 20 most inventive towns in America were in California, and 10 of those were in Silicon Valley. San Jose led the list with 3,867 utility patents filed in 2005, and number two was Sunnyvale, at 1,881 utility patents.
According to a 2008- study by AeA in 2006 Silicon Valley was the third largest (cybercity) high-tech center in the United States, behind the New York metropolitan area and Washington metropolitan area, with 225,300 high-tech jobs. The Bay Area as a whole however, of which Silicon Valley is a part, would rank first with 387,000 high-tech jobs. Silicon Valley has the highest concentration of high-tech workers of any metropolitan area, with 285.9 out of every 1,000 private-sector workers. Silicon Valley has the highest average high-tech salary at $144,800.