Silicon Valley has long been driven by the personal computer (think Intel, Apple and HP), along with computer networking or data communications (think Cisco and Juniper). For years these markets have fueled the growth of countless technology companies both here and abroad. Then along came wireless communications, with a focus on cellular, as the only major market growing faster than the PC market. With the value of smartphone sales poised to surpass that of personal computers around the globe, Silicon Valley has emerged as a major center of influence for wireless, alongside places like Espoo in Finland and Kista in Sweden, which have long carried the wireless mantle.
Several trends are behind this change: The maturity of the wireless industry has shifted the focus from hardware to software, data traffic has overtaken voice traffic on mobile networks, and our insatiable desire for mobility – all of these accelerated by the development of the smartphone. Silicon Valley now finds itself at the center of a mobile software revolution, in parallel with a rise in demand for data solutions coming from mobile networks.
During the roll-out of the first digital cellular networks in the early 1990s the focus was on hardware, as mobile operators delivered voice connectivity using circuit-switched connections. Coverage was the issue, and large “macrocell” base stations were deployed to provide service to as much as the population as possible. Handsets had yet to become ubiquitous, and capacity problems were unheard of, except during peak commute hours. In addition to high monthly bills, users regularly complained of dropped calls due to holes in network coverage.
Three generations of technology later, the focus has now moved from hardware to software – specifically mobile applications. Where consumers were once seeking for the latest “cool handset”, they now clamor to make sure they have the latest “cool app.” Carriers are deploying smaller, lower-cost infrastructure in the form of “microcells,” “picocells” and even “femtocells,” in an effort to deliver sufficient capacity for the growing traffic. Networks are moving to packet switching as data traffic overtakes voice. Unfortunately, users still complain of dropped calls, but the issue is capacity and not coverage, as data traffic now exceeds voice traffic on mobile networks.
The Rise of the Smartphone
With the introduction of the model 9000 Communicator in 1996, Nokia earned the credit for the invention of the smartphone. However, much of the smartphone’s subsequent evolution can be traced to Silicon Valley, which gave us the Danger Hiptop, followed by the Palm Treo. Along the way computer-centric Apple moved into multimedia with the iPod, and then into cellular with the iPhone – and struck gold. The combination of the iPhone, together with the iTunes App Store, was a game changer and has allowed Apple to effectively wrestle control of the mobile customer away from the wireless carriers. Last year the company claimed to be the largest mobile device company in the world. Google then introduced the Android OS, and the mobile landscape has never been the same. Silicon Valley has become the capital of mobile application development, and today almost every one of the major smartphone vendors has a significant software and/or mobile application development presence there. The list includes RIM, Sony Ericsson, HP/Palm, Motorola, and even Microsoft.
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