The good, the bad and the promising: technology 2002

If one thing is to be said for 2001, it is not a year to remember. As the clock inches toward 2002, we face possibility of war in South Asia, terrorism has reared its ugly head in way that 3500 souls are tormented, and the much vaunted technology boom is finally over.

The geo-political situation facing the world today is not something I am equipped to comment on, so I would stay focused on topics more up my alley ? technology. Given that many in South Asia, and many South Asians make a living in the technology business, many are wondering what 2002 has in store for them. Is there some good news in the offering? Or will the number of ¶For Rent¾ signs increase in the lovely city of San Francisco?

Well from where I stand, unfortunately there is some bad news still in the offering. In my conversations with venture capitalists, professionals and those more informed than mere mortals, we are about to enter the third, and perhaps the last phase of a start-up shake-up. If rounds one and two saw dot-com, ecommerce and telecom services companies get purged, Silicon Valley is now gearing up for a complete meltdown in the optical networking and storage industries.

At last count there were 700-odd start-ups trying to invent gear that would be bought by dot-com companies, new generation telephone companies and network services providers. Unfortunately many of those companies like DSL provider Northpoint, bandwidth wholesalers like PSINet and 360 Networks, and hosting operations like Exodus Communications (co-founded by BV Jagdeesh and KB Chandrashekhar) are words on the yellowing pages of long forgotten magazines like The Industry Standard.

And if that was not enough, the more established phone operators like Qwest Communications, Sprint, AT&T, WorldCom and even baby bells like SBC Communications and Verizon have scaled back their plans to invest in new equipment. They are all trying to save money, cut costs and postponing all spending decisions to some future date. That is just the worst kind of scenario any entrepreneur can imagine. The things get even grizzlier, when the same entrepreneur has to go out and raise more capital. Chances are he is not going to get any money even from his existing backers.

It does not matter who your backer was ? if you have not been able to make it so far, chances are you are not going to get any money. Raj Singh, the famous entrepreneur and venture capitalists who has had hits like Cerent, Siara, SwitchOn and Catamaran could not do much to rescue Inara Networks, a company which emerged from the ambers of Roshnee. Or Vinod Khosla who backed Broadband Office to only see it shuttered down.

Does this mean it is only bad news in the offering? Fortunately not, for there is this vast brain trust which lives and thinks every day in Silicon Valley. After close consultations with experts, every year Red Herring, a technology business magazine, and my employer comes-up with a list of top ten trends which the editors believe will be driving forces of innovation in Silicon Valley.

My personal big trend for 2002 is the ¶Data Center.¾ Just like micro-computer replaced the mainframe, and personal computer replaces the micro computer, it is time to bid adieu to our aging personal computers. Mind you, the PC as we know it will not go away, but it will no longer be the center of the technology universe.

In my article for the Herring, I wrote, ¶The vision: highly advanced data centers will become critical hubs for Internet communications and accelerate the acceptance of emerging technologies like real-time computing, the wireless Web, and grid computing. Data centers also will accelerate the movement toward outsourced computing resources, bringing to fruition computing networks that are truly distributed, even across vast distances.¾ This is a revolution of sorts in which many South Asian Americans are participating.

Atiq Raza of Raza Foundries have backed new technologies like Infiniband, Promod Haque of Norwest Ventures has placed his chips on Inkara Networks, while Vinod Khosla of Kleiner Perkins is betting on Centrata. Entrepreneurs such as Rosen Sharma along with co-founder S. Keshav have started Ensim which is making sort of an operating system for the new improved data center.

Despite the economic woes of companies such as Exodus, the data centers offer a lot of opportunity. For instance it has become clear that we all need the Internet to do business in the future. However, even as we realize the importance of the net, the technology industry never really focused on developing hardware and software that could run these data centers cheaply, and easily. The gear in place was good enough for companies with a few thousand employees, but not enough when it came to millions of users.

“Fundamentally I believe that computing is moving into the network, and complex enterprise applications are moving into the data center,” says Mark Shull, CEO of Digex confided in me as we noshed on a simple salad in a bistro right across from the Red Herring offices in San Francisco’s SOMA district.

In his statements lie hope for Silicon Valley and I recommend that you read two piece articles I wrote for the Red Herring on the forthcoming Data Center upgrades. While it might seem self serving, but data center trend is only going to gather momentum. These two articles – Infrastructure upgrades loom for data centers and Data Central will explain the technology in greater detail. You can also find these links at my website, In the next column, I am going to take a look at what is on the top-ten list for other gurus in Silicon Valley, and until then lets pray for peace, and a very happy and profitable 2002.