Apple today. 27

Silicon Valley - what is that?

This question may have occurred to many people's minds when they came across the term Silicon Valley. What hides behind it is mostly unknown to them, although the revolutionary inventions and developments, which have been made in this «Valley», affect everyone's daily life, and it is hard to imagine our modern civilization without them. Silicon Valley is the heartland of the microelectronics industry that is based on semiconductors.

Geographically, it is the northern part of the Santa Clara County, an area stretching from the south end of the San Francisco Bay Area to San Jose, limited by the Santa Cruz Mountains in the west and the northern part of the Diablo Range in the east. It covers a thirty- by ten-mile strip extending from Menlo Park and Palo Alto, through Los Altos, Mountain View, Sunnyvale, Cupertino and Santa Clara, down to San Jose.)

The name Silicon Valley was coined in 1971 by Don C. Hoefler, editor of the Microelectronics News, when he used this term in his magazine as the title for a series of articles about the semiconductor industry in Santa Clara County. "Silicon" was chosen because it is the material from which semiconductor chips are made, which is "the fundamental product of the local high-technology industries."⁾

Silicon Valley saw the "development of the integrated circuit, the microprocessor, the personal computer and the video game"⁾ and has spawned a lot of high-tech products such as pocket calculators, cordless telephones, lasers or digital watches.

Looking at our high-tech society in which the PC has become indispensable - both in business and at home, replacing the good old typewriter by word processing - the crucial role of Silicon Valley as the birthplace of the microelectronics and then the PC revolution becomes even more evident.

Silicon Valley is also seen as a place where many entrepreneurs backed by venture capital have made the American Dream come true as "Overnight Millionaires."

This makes Silicon Valley a philosophy saying that everything which seems impossible is feasible and that improvements in our society can take place daily, as Thomas McEnery, the mayor of San Jose, the capital of the Santa Clara County, puts it.⁾

Thomas Mahon calls it the "economic and cultural frontier where successful entrepreneurship and venture capitalism, innovative work rules and open management styles provide the background" for the perhaps "most profound [...] inquiry ever into the nature o f intelligence" which might, together with "bioengineering and 'artificially intelligent' software, [...] affect our very evolution."⁾

On the following pages I would like to convey the image of Silicon Valley as the nucleus of modern computing, presenting the most important events, which comprise the developments of the three major companies Hewlett-Packard, Intel and Apple.

Stanford University

The story of the Silicon Valley starts with Stanford University in Palo Alto, which has been of fundamental importance in the rise of the electronics industry in Santa Clara County.

In the 19th century, Spanish settlers, who have been the first white visitors to California, founded civilian communities and gave them Spanish names such as San Francisco, Santa Clara or San Jose. They liked the Mediterranean climate in the Santa Clara Valley, which was very hospitable. This area came to be used by farmers and ranchers cultivating orchards, for it provided "some of the world's finest farming soil."⁾

In 1887, Leland Stanford, a wealthy railroad magnate who owned a large part of the Pacific Railroad, decided to dedicate a university to his son's memory who had died due to a severe disease shortly before he intended to go to a university.

Leland Stanford and his wife built Leland Stanford Jr. University on 8,800 acres of farmland in Palo Alto and also donated 20 million dollars to it. The university opened in 1891 and "would in time become one of the world's great academic institutions."⁾

In 1912, Lee De Forest, who had invented the first vacuum tube, the three-electrode audion, discovered the amplifying effect of his audion while working in a Federal Telegraph laboratory in Palo Alto. This was the beginning of the Electronics Age, and "amateur radio became an obsession"⁾ at Stanford University.

Frederick Terman, who was the progenitor of the initial Silicon Valley boom, changed the state of this university fundamentally. Today he is also known as the "godfather of Silicon Valley."⁾ Terman was born in 1900, and as the son of a Stanford professor (who developed the Stanford-Binet IQ tests) he had grown up on the campus. After his graduation from Stanford University he decided to go East to the Massachusetts Institute of Technology (MIT), which was the leading university in technology then. He studied under Vannevar Bush, who was one of America's leading scientists, and was offered a teaching position at MIT after receiving his doctorate in 1924.

He returned to Palo Alto to visit his family before he intended to start at MIT, but he was caught by a severe case of tuberculosis, which forced him to spend one year in bed. This made him finally to decide to stay in Palo Alto and teach at Stanford University because of the better climate in California.⁾

Terman became head of the department of engineering by 1937 and established a stronger cooperation between Stanford and the surrounding electronics industry to stop the brain drain caused by many students who went to the East after graduation, as they did not find a job in California then.⁾

The Varian brothers are an example of such cooperation between university and industry. After graduation they founded a company upon a product they had developed at the Stanford laboratories. Their company, Varian Associates, was settled 25 miles from the university and specialized on radar technology.

After World War II, the Stanford Research Institute (SRI) was founded. Its aim was to provide the industry with more skilled students and to increase the number of companies in Santa Clara County.

Terman wanted companies to settle next to the university. In 1951, he founded the first high-technology industrial park, the Stanford Research Park, "where business, academic and government interests could come together in a synergistic vision of the future."⁾ Portions of this land would be leased to companies, because the "original Stanford family land gift forbade the sale of any of its 8,800 acres."⁾ These companies were offered close contacts to the SRI and could lease land for 99 years at a fixed price, which they had to pay in advance. The first firm to settle in this park was Varian Associates leasing land for $4,000 an acre, which was a good deal as there was no inflation clause in the agreement making this site today worth several hundred thousand dollars.

More and more firms - among them Hewlett-Packard as one of the first residents - settled their Research and Development (R&D) departments in this park, and they were to become the "core of the early explosive growth of Silicon Valley."⁾ Today, there are m ore than 90 firms employing over 25,000 people.

During the Korean War the US government placed Stanford with a great deal of their projects, which made more, and more electronics companies (among them IBM and Lockheed) open R&D departments in Santa Clara County.

Due to his prepaid leasing program Terman received more than $18 million and, moreover, many companies endowed the university with gifts, which Terman used to hire qualified professors from all over the USA. Thus, he had created a mechanism which increased the settlement of the electronics industry.

The successful Stanford Research Park has served as a worldwide model for a lot of other high-technology parks.⁾

Hewlett Packard - the garage myth

Hewlett-Packard was one of the first companies to be founded in the Silicon Valley and has today become the largest one to be seated there. Its story is typical for this Valley and has had a great impact on many firms founded later on.

HP: Foundation and first years

Bill Hewlett and David Packard met at Stanford University in 1934. Bill Hewlett was the "son of the dean of the Stanford Medical School, while Dave Packard had come to Stanford from Pueblo, Colorado,"⁾ and was an enthusiastic radio ham.

They both were very interested in electronic engineering and spent a lot of their free time experimenting in Terman's lab who supported them. After graduation in 1934, Packard went to Schenectady, New York, where he worked for General Electric (GE), while Hewlett went on studying at the MIT. In 1938, Terman called them back to Stanford where they would earn electrical engineering degrees after their fifth year of study.