Leading the mobile revolution — for now

Feb. 22: see the updated artwork below.

As I’ve remarked before, the Silicon Valley hometown crowd seems convinced that this is the best possible place in the world and will remain so until the end of time. Like onetime Stanford prof Andy Grove, my view is that it’s better to run scared.

So to my eyes, the headline in Friday’s SJ Mercury (over an AP story) seemed to veer onto the dangerous side of triumphalism:

Cell Phones
Wireless Turf Fight
Valley giants Google, Apple moving in on carriers

By Peter Svensson
Associated PressBARCELONA, Spain—Silicon Valley is looking like a winner in the tug-of-war with wireless carriers over who will control the new world of Internet-connected phones.

I’ve remarked on the Merc’s excessive optimism before, which earlier this year included overstating the influence of our still-small local cleantech industry (when clearly China is dominating key high-volume, cost-sensitive segments like solar panels.)

The sidebar — which appears nowhere on the Merc website (or the web) — is even more upbeat because (I’m guessing) it was written by a Merc editor:

Score One for the Valley

What's happening: Developments in the wireless world are playing into the hands of Silicon Valley's PC- and Internet-oriented industry, led by Google and Apple.

The opposition: Wireless carriers see Web companies reaping revenue from add-on services such as Internet searches and downloaded applications, and ned to figure out how to profit in an Internet-dominated industry.

For consumers: Internet-oriented smartphones provide more choice and freedom. But the way we pay for wireless service is likely to change, as data becomes more important than voice minutes.

Sure, claims made 5 years ago that the US is irrelevant to the mobile industry now appear foolish. And the success of Apple and Google also show how the value proposition of the Mobile Internet owes more to the Internet companies than the Mobile ones, and that carrier power has been eroded by their success. I remarked on all three points in my forthcoming iPhone paper (now available at Telecom Policy)

And, in fact, a later AP article by Matti Huuhtanen in Helsinki conveys the concerns of the industry’s longtime leader:

Nokia Chief Executive Olli-Pekka Kallasvuo concedes the Finnish company is under pressure. "There is no doubt the center of mobile innovation has shifted from Europe to Silicon Valley. We are working to tap into this innovation," Kallasvuo told analysts earlier this month. He said Nokia had installed more than 3,300 employees in North America to redress the balance.

Certainly in the near term, Google’s mobile platform bet seems like a sure thing — since for mobile search revenues, they have a “heads I win, tails you lose” bet on any platform with a decent web browser. But all the local tech companies know they can be dislodged — with names like Sun Microsystems and Netscape to remind them that market share in IT (unlike sugar water) is highly transitory.

Overall, I doubt many established SV companies are coasting on their laurels. Meanwhile, the small ones are a long way from having the option of coasting, trying to survive the second VC “nuclear winter” scenario in less than a decade.

Update Monday 8:30am: From England, David Wood comments on a similarly triumphalist article in Fast Company, and in response quotes this Steinberg-inspired poster by Rubicon Consulting (7 miles from where I sit) that suggests such boosterism is chronic in the Valley.

Note to readers: Normally I’m reluctant to comment on the local paper, but I keep getting emails from readers elsewhere in the US and world — including one this morning from Hyderabad (via Philadelphia).