I think sachinag is trying to say that consulting companies are services companies, whereas startups and silicon valley seem to revolve around product companies. The semantics of the distinction are around scalability of the business. You could also look at revenue per employee or P/E ratios as other indicators.
Personally I agree that scalability is a better metric for enterprise attractiveness than raw size. Investors agree. CSC has a P/E ratio of 5.8, whereas Microsoft's is 12.9.
The list also just feels mistaken, but that might be my misguided sense of enthusiasm for shiny companies. Fiserv is a $6B company that I had never heard of. I'd probably rather go long on Facebook or Twitter, but a savvy investor might disagree.
Google's fascinating when it comes to categorization. I think it's pretty clear that they make software. What's awesome is that they, as you say, don't monetize that s/w by selling it (like 37signals or whatever other internet company); they do so through the sale of advertising space. They're the biggest dichotomy between core competencies (software engineering) and monetization (ads) that I can think of, perhaps in history.
Actually, seems like companies with wildly disparate core competencies and monetization schemes tend to do pretty well. Or maybe it's selection bias, and the ones that do well do really well but the rest fail miserably. Either way, I'm waiting for some company to close the Google -> Nike loop by leveraging their expertise in sneakers and sportswear to sell lots of software.
Also, some locations are bogus. Accenture is incorporated in Bermuda for tax purposes, but the actual work is done in many major cities. IBM, though the headquarters are in NY, has major offices in Silicon Valley.
IBM has major offices of comparable size in Austin, Raleigh, and several international locations, as well. I would say the proportion of their Silicon Valley presence is insignificant. They're probably to big and historic to localize, in any case.
These are the largest 20 companies classified by Forbes as software companies. With the large organizations it's almost impossible to say, "they do that" since they invariably do a lot of things; any other hand-wavey sorting wouldn't have been significantly more objective.
I don't think the SEC classification is useful for the purpose of locating software companies as the SEC regulates only publicly traded US companies. They're interested only in very specific aspects of a company and they categorize accordingly.
That's a good point. It's been a good place to "raise kids"--if your kids are little companies because there are lots of great people to work with, impedance is low because of shared norms, and outsiders are aware of the importance of this symbiosis. Not unlike Hollywood.
Like Hollywood, Silicon Valley is subject to "runaway production" in which some other entity provides incentives to a company/production in the hopes of jump-starting a similar situation in their own locale. This provides some incentive to Silicon Valley/Hollywood to not milk their own cow too hard or too often.
When a large company relocates, there's lots of news and hand-wringing, but really, big companies are all grown-up and ready to leave home: "Enjoy North Carolina, son, we'll see you in Cupertino at the holidays!" For startups and indie productions, the environment has to be right. The long-term risk to California is that it no longer provides the confluence of people, ideas, economic environment, regulatory/policy environment, etc., that spawned Hollywood, Silicon Valley, biotech beach, the aerospace corridor, etc.
In my experience, Hollywood and Silicon Valley are unique environments that are valued (by outsiders) for their contribution to the tax base, ability to create jobs, etc.; i.e., instrumentally. But seeing them only in this way will lead to their destruction, not unlike old-school strip-miners who pillaged the hillsides and then bailed. Outsiders cannot be expected to understand, so it is the responsibility of those who exist in and benefit from unique, complex, symbiotic communities like silicon valley, to steward the community and protect them from predators who see fodder for their own will to power.
Well, a large software company has varying needs, some of which may not be met well in the Valley. For example, Zappos started in SF, but moved to Las Vegas for the lower cost of living.
That depends on what incentives you could wring out of the state and local governments.
If you're a large company, you were once a small company and there's been no place better than silicon valley to grow-up as a young company. I think this is changing.
This list is incorrect. The author asks "just where have most of the great software companies been started?", and proceeds to list headquarters. Three corrections, for US companies (yes, I checked the entire list):
2. Microsoft: Albuquerque, New Mexico
6. First Data: Omaha, Nebraska
11. Computer Sciences Corporation: El Segundo, California
So make that 7, for what it's worth. The list really isn't worth looking at, though. The other problems mentioned here are trivial, compared to the problem of a sample size of 20 being too damn small to have any meaning.
I hate lists like this, and the stupid conclusions drawn from them. Exercise for the reader my ass.
I should restate. Most of these companies have a presence in the Valley. Here's where they are.
1. IBM, Almaden
2. Microsoft, 85 and 101
3. Oracle, Redwood Shores
4. Google, next to Microsoft
5. Softbank, partner with Yahoo
6. SAP, Palo Alto
7. Accenture, San Jose, next to Adobe
8. Computer Sciences Corporation, haven't seen them
9. Yahoo, next to Moffet Field
10. Capgemini, Cupertino
What's a "location"? I have friends who work in: Intel, Haifa, Israel; Google, New York, NY; IBM, Gaithersburg, MD; etc.
This "location" is, apparently, the location of the headquarters. Who works at the headquarters? Top management? Or is it about where the company started? A startup is normally a small company, and a small company is unlikely to spread wide (although these days it is far from unusual to find a company with management and the sales department in the US and development in the Ukraine). But when one deliberately selects a large company, I would expect them to explain how they define the location and for what purpose. I did not get it from the article.
(Aside: "one selects... them explain": modern English?)
as location becomes ever less important for running a business governments will hopefully be forced into competing more strongly for business with sensible tax structures.
I'm not sure that the "largest" companies are even relevant in a discussion about the valley since the larger companies all tend to be outliers in one way or another.
About 10% of the INC 500 are based in California. Higher than anywhere else? Maybe, I don't know.. but not exatly earth shattering.
