I've been reading about how young people prefer to live in or close to cities these days, as opposed to the distant suburbs (exurbs). This is the way it used to be, so why should anyone be surprised? Before WWII, and the car/suburb phenomenon, cities were where the well-off lived. This has been largely true in Europe all along. So, why shouldn't US cities regain their former glory? I'd say, it's about time.
It will be interesting to see whether younger people continue this trend after they have kids of their own. Indications are, according to what I've been reading, that they don't want to move far from the city, if move at all, even after they have kids. The notion that people MUST want to get "more house for the money," where "more" is in square feet, by moving far out, is a notion that no longer seems to hold a lot of sway. Good deal, I say.
As to using the infrastructure vs designing or building the infrastructure, I'm sure there are very many jobs, even in companies like Cisco, that don't require working inside a factory. But even if someone has to work in more of a factory setting, it's still possible to commute out rather than commute in. The other aspect of this is, even just office space inside cities is becoming prohibitively expensive. Companies that need to keep their overhead costs down can't afford to set up offices in cities, in many cases. So, it's not just factories that locate out in the suburbs anymore.
I think that cities which get a reputation for being "tech centers" are simply cities that have a number of tech-related universities. Boston/Cambridge and San Francisco are certainly two such, but so are others, e.g Raleigh/Durham NC, LA, even Wash DC suburbs.
Living in the Bay Area my entire life, there is definite shift among not only the younger set to live and work in SF, but also the older set. Empty nesters that live on the Penisula are also moving to SF to enjoy all the City has to offer. In hind site, I should have moved there when I was single. There is so much to do. But, I'm stuck in the 'burbs. You hit the nail on the head. If it's software related and you're a software engineer then you can call the shots where you want to live and who you want to work for. If you're in hardware (semi) then more than likely you're living and working in the South Bay (San Jose, Santa Clara, etc.). It's boom time again here in the Valley and it's spreading to the City. How long it will last no one knows. Fasten your seat belts. One other comment: Salae is barely in SF. Right off 101 near old Candlestick Park. Not the greatest area of SF. Certainly no cable cars go there.
The trend will most definitely continue, even post-children (should they choose to have any/as many is a different topic). NYC is a good example of where many generation X-ers, now in their 40s, really prefer to just stay in the city. Of course there are those that prefer not to or simply want a change, but it's interesting to see that many are choosing to stay.
I would go as far as to say that the ability to live in an urban center has largely influenced career decisions. Many students from top engineering schools found opportunities in finance/ marketing/ consulting/ law, and it's undoubtedly partially influenced by the ability to live in places like NYC, Chicago, SF, etc. If say Intel had established offices in such paces, they probably would have lured more talented graduates who later chose other paths to actually pursue an engineering-related career.
A little story - I knew a guy who did an MS (in computer science) at Stanford in the early 2000s, got bored of California's laid back living and corporate life at Oracle (and recall there were very few promintent startups in the early 2000s), and moved back East to be where the action was (and later went into something completely different). I wonder if he's looking back now and shaking his head in regret of what exciting opportunities he could have pursued with his background as a Stanford CS grad.
If IoT actually becomes the next big thing, don't be surprised to see a new breed of startups in cities, and as a side effect, retaining many bright minds who won't exit engineering totally.
I'm not sure how I'd class the app companies; maybe technology companies but not high tech companies, because they use existing technology but aren't creating new technology.
As far as I'm concerned, San Francisco is a nice place to visit, but not to live (and when I was single, I spent more time in the Sonoma county wine & beer areas than SF). Also, a lot of SF isn't that exciting, either, and you're farther from the interesting tech stores such as Fry's and Excess Solutions.
And I do suspect that when many of these youngsters start having children, they will want to move out, too, because of safety, schools, and room. After all, the suburbs have been around for a long time (e.g. Philly's Main Line since the 1820's). Of course, by then they'll probably be working for a different company because they'll be too old and have been replaced by younger city-dwelling hipsters or their companies will have gone bankrupt or been acquired.