ARTIN
PICHINSON is one of Silicon Valley's undertakers. His company,
Sherwood Partners, has carved out a prosperous niche as an expert in
shutting down failed technology start-ups on behalf of venture
capital firms and other disenchanted investors. And, this summer, he
plans to move his company's headquarters to Palo Alto, Calif., the
heartland of opportunity for his rapidly growing business.
Mr. Pichinson, 57, does not always bury companies. Some can be
rehabilitated or sold off. But Sherwood Partners has shut down 150
once-aspiring start-ups in the last two years, and Mr. Pichinson
figures that thousands more are destined to fold. His company stands
ready to help things along.
"We're doctors of reality," said Mr. Pichinson, who began his
business career in the garment industry. "You don't have to have a
Harvard M.B.A. to know that more money has to come in than go
out."
The winnowing of the corporate population is just one sign that
the information technology industry is maturing in ways that will
affect technology companies, their customers and investors for years
to come. But what's painful for Silicon Valley is beneficial for
those who use the stuff it produces.
The industry, according to Irving Wladawsky-Berger, a strategy
executive at I.B.M.,
has entered "the post-technology era." It is not that technology
itself no longer matters, he explained. Instead, he said, the steady
advances in chips, disk storage and software mean that the focus is
no longer on the technology itself — with its arcane language of
processing speeds and gigabytes — but on what people and companies
can do with it.
As a result, industry executives and analysts say, the balance of
power is shifting away from technology suppliers and toward their
corporate customers. At the same time, the use of lower-cost
building blocks of computer hardware and software is spreading,
making it easier for companies and individuals to share data and
work together using industry standards rather than remain dependent
on one or two main suppliers.
These trends, they say, point to increased pressure on prices and
profits for most technology companies, a good deal for corporate
customers and a very tricky time for investors.
This is more than a backlash against the bubble years, or a mere
pendulum swing in attitudes and practices. The technology itself
will still deliver waves of innovation in the future. Yet an
industry that has risen to account for 10 percent of the economy and
nearly 60 percent of business capital spending can no longer play by
its own rules.
"I don't see a loss of faith in technology, but gravity has been
turned back on," said Dick Lampman, the director of Hewlett-Packard's
research laboratories.
Yet an article published last week in The Harvard Business Review
does question corporate America's faith in the value of technology.
Titled "IT Doesn't Matter," the article argues that information
technology is inevitably headed in the same direction as the
railroads, the telegraph, electricity and the internal combustion
engine.
All of these industrial technologies aged from their boom-time
youth to become, in economic terms, ordinary factors of production,
or "commodity inputs," the article noted. "From a strategic
standpoint, they became invisible; they no longer mattered," wrote
Nicholas G. Carr, editor at large of The Harvard Business Review.
"That is exactly what is happening to information technology
today."
Most corporate executives, however, still think there is a lot
they can do with technology to give them an edge. Glen Salow, the
chief information officer of the American
Express Company, sees the recent trends in the industry as
working to his advantage. First, he said, the hard times in the
technology business have increasingly meant that big corporate
customers hold the upper hand in their dealings with suppliers. That
shift, Mr. Salow added, has given him not only more bargaining power
on price, but also more influence in the products and services that
are developed.
Corporate customers want to use technology to achieve goals like
cutting costs, improving customer service and speeding the pace of
bringing new products to market. But in the past, the computer
industry has often treated customers with a certain arrogance,
selling raw technology, take it or leave it.
MR. SALOW recalled a conversation he had in the late 1990's
with the chief executive of a major computer company, whom he
declined to identify. As Mr. Salow recalled, the computer executive
told him, "My job is to make the hottest box on earth and deliver it
on your loading dock."
"You don't hear that kind of talk anymore from him or anyone
else," he said. "There has been a huge change from that perspective.
The voice of the customer is being heard."