Each person should assess his or her own career goals when considering this decision. If one's goals include conducting research and publishing in academic journals, then by all means go for the PhD. If one's goals include someday returning to academia as a lecturer and/or researcher, a PhD will be an essential qualification.
But if one's goals are to obtain employment in the private sector as a working engineer, involved in the design, development, testing and/or manufacturing of for-profit products, the value of the PhD is less clear, and there could even be some negatives associated with it -- pricing onself out of the market for certain jobs, or giving the impression of being too specialized.
My thoughts on this are from a U.S. perspective and the situation may be quite different in other countries. The degrees themselves are, I think, perceived differently in different countries. It is my impression that it is more common in Europe, for example, to find PhDs working in product development than it is in the U.S.
Frank, I appreciate your points. I think even in the US, perhaps more in Silicon Valley, there are more PhD's working in the industry than in other places.
I spent three years of my life in academia and I do miss it. Working in the industry that too in startups has been more rewarding though not financially!
Max, is the student's name Razi or Ravi? You very well know there's many a slip 'twixt the cup and the lip! Nonetheless, it is that proverbial fork in the road that one comes to in their life time. My generic advice would be to make a choice that gives you the most flexibility to go either way at any stage in one's life!
Let's differentiate "working in industry" from "developing products." At the risk of over-generalizing, I would say ask a member of a U.S. IC design and/or verification team how many PhDs were involved in their last project and the answer will mostly likely be zero. Go to the EDA companies whose tools they used to design & verfiy that IC and ask them how many PhDs were involved in writing & testing that software and again the answer will most likely be zero. But ask them who developed the algorithms that those tools use for logic synthesis, timing analysis, power analysis and automated place & route, and the answer will most likely be "a bunch of PhDs."
Unless the student is pursuing a career in academia, I can't see the downside of going out into the working world and getting some real, hands-on experience. He will get a better understanding of what it is to be an engineer and what it is he likes and doesn't like about doing the work. It would be a pity to rush into a graudate degree only to find out that isn't at all what you really want to do.
@Frank: I agree, it depends on the company and product type. If you step away from the EDA businesses, there are many examples where PhDs are engaged in product development including hands-on coding. Google & Yahoo are great examples where you find an abundance of PhD's doing handson work!
@kfield: I can't see the downside of going out into the working world and getting some real, hands-on experience.
I think it's true that having some real-world, hands-on experiance benefits everyone -- it woudl give the person in question a richer perspective if he/she subsequently decided to return to academia. The big downside is that once you are out in the world earning a wage, it's really difficult to return to an academic environment (unless you are independently wealthy)
In general, my thinking is that people should get as much formal education as they can afford (in money, but also in effort!!). It becomes invaluable later.
Like Frank said, when you ask people who developed the algorithms for all the complicated gadgets they are designing, it will be those with lots of formal education under their belts. So unless you're happy letting others do all this heavy thinking, the closer you can get to that level, the better. IMO. It gives a better understanding of the underlying concepts, and it invariably gives the designer a better perspective, i.e. a better understanding of what can be done in the universe of possibilities.
The downside is that if you go into industry, you will often not be able to exploit all of this hard-earned knowledge. At least, not all of the time. But in my view, it's never wasted. I've never subscribed to the notion that maximizing one's career earnings is all that matters.
Thanks, Bert, for improving my productivity! All I can add is that to get at some of the more advanced development work, it doesn't hurt to have a Master's or even a Ph.D. in some cases (semiconductor process work, for example). Someone else pointed out that Google and other companies hire people with doctorates, such as for the Google[x] team, for some interesting work.