Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

IBM: To Be Or Not To Be In Silicon Valley - Is There a HP Advantage?

Posted by Tom Foremski - December 6, 2007

Wednesday evening I'm heading over to an IBM holiday party in North Beach, it's late but I want to show up and say hello to the hard working IBM PR team.

It was good to see Jim Larkin and some of his team, plus much of the San Francisco office. I've worked with many of them on countless stories for many years and continue to do so. What I like about them is that they are always very competent and professional while maintaining a healthy realism about the nature of their work... (i.e they have a life :-)

The event triggered a few thoughts about IBM and my long association with Big Blue.

I used to cover IBM extensively when I worked for the Financial Times. I still write about IBM but not to the same degree. I always enjoyed the challenge of covering IBM because it has many massive business groups that would be giants in each of their markets if they were independent.

Reporting on IBM required an understanding of the dynamics in each market: IT services, the middleware software market, the chip market, microprocessors, servers, mainframes, financial services... And not too long ago, hard drives, PCs, and notebooks until IBM sold off those businesses.

I eventually got to interview every head of every IBM business group and then the big guy himself, Sam Palmisano. But it wasn't easy. IBM won't let you near its top executives or top strategists until you've proven you understand its many businesses. And it takes years of work to get into the CEO's office.

East Coast culture

The culture of IBM is also interesting. It is very East Coast and very not Silicon Valley. Yet IBM has roots in the Silicon Valley area that go back more than half-a-century. And it still has a large presence here with its research labs.

IBM always projects an East Coast culture. I'm always meeting with IBM execs who have flown into town for a few days, rather than being locally based. And they dress differently and talk differently from the locals.

But will its East Coast culture continue to work for IBM? Should it move more people here? Other companies are doing it, relocating to Silicon Valley. It's a trend that has accelerated tremendously over the past couple of years.

Silicon Valley benefits

The relocation surge is happening because of three things: location, location, and location. Companies find tremendous value in being here. And visiting Silicon Valley or reading about its trends, is not the same as living here.

The conversations we have in Silicon Valley, about business models, about technology, about society, are tremendously influential on a global scale. This has been proven time and again and that's why companies move here. That's why tens of thousands of the world's brightest and smartest move to Silicon Valley every year.

So does that mean that there is a substantive competitive advantage to being here and immersed in the local culture?

IBM has expanded its corporate PR team over the past few years in San Francisco/Silicon Valley but is that enough? Could IBM be missing things of great value by being an outsider?

The HP advantage?

Could the boost in the fortunes of IBM rival Hewlett-Packard be partly attributed to the fact that HP lives in the heart of the most innovative region on the planet? It'll be interesting to see if HP will demonstrate the Silicon Valley effect in its future business performance.

Despite IBM's long Silicon Valley history it sometimes seems as if IBM doesn't "get" Silicon Valley, and that it is amused rather than inspired by Silicon Valley ideas and antics.

Dotbom jokes

For example, I remember seeing Sam Palmisano a couple of years ago at the San Francisco Museum of Modern Art. He kicked off his speech with a couple of jokes, which turned out to be of the dotcom dotbomb variety. He said there was more technology in a cash register than in a typical dotcom company.

There was little laughter from the audience of journalists, analysts, and local executives. Even though the the jokes were funny because they were very true, they felt very much out of place.

Silicon Valley has been suffering through its deepest and most difficult business cycle ever, with massive job losses and company failures. Yet this East Coast big shot thinks it is funny. That's the way Mr Palmisano's presentation came across--even if it wasn't meant that way.

But I'm certain that the jokes provided a glimpse into IBM's private thoughts about Silicon Valley, and momentarily revealed a superior and dismissive attitude towards Silicon Valley. That could come back to bite IBM, imho. Things like that generally do.

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