Larry Ellison sees bleak future for technology
Mylene Mangalindan, Wall Street Journal
Published April 14, 2003
Wake up, Silicon Valley. Your misspent youth is behind you.
That's the unlikely message from Larry Ellison, chief executive of Oracle Corp. and a longtime captain of the valley.
Ellison disputes the popular, romanticized vision of the computer industry as always growing and reinventing itself. He says the high-tech world -- now in the throes of a devastating downturn -- might not be immune to aging.
"What's going on . . . is the end of Silicon Valley as we know it," the co-founder of the world's second-biggest software company, after Microsoft Corp., said recently. "The next big thing ain't computers." Instead, he said, it's biotechnology.
Ellison, sounding like a modern-day Cassandra, paints a dark vision of the computer industry's future: increasingly standardized products with little distinguishing technology and thin profit margins. Sweeping consolidation, prompting the death of 1,000 tech companies. Fewer start-ups. And a handful of category-dominating winners, which will control innovation.
"There's this bizarre notion in the computer industry that we'll never be a mature industry," Ellison said. In his view, the industry "is as large as it's going to be."
The Oracle chief said his analysis is based on economic principles that he jokingly suggests should win him the Nobel Prize: "I call it 'specialization of labor' as well as 'economies of scale.' "
Among his predictions: cheaper computers that use the free Linux software and other technical efficiencies will drive down prices. More software development will move overseas, seeking lower-cost labor. Maturation of the industry will lead to bigger companies, which will offer a wider range of products and take more market share from everyone else.
All this is good for customers, he said. Technology companies will be forced to simplify their products and services. They will have to innovate and be smarter about how they operate.
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