J003-Content-A-Cringe-worthy-analysis-of-the-US-computer-biz_SQThe US computer industry is going down and it has no one but itself to blame. That, at least, is the view of one Robert X. Cringely, a long-time industry watcher. Part of the problem, he argues, is immigration and foreign workers policies. The other part is that many tech execs are sometimes foolish.

If you ever read InfoWorld, or read the 1992 book ‘Accidental Empires: How the Boys of Silicon Valley Make their Millions, Battle Foreign Competition, and Still Can’t Get a Date”, or even saw the documentary Triumph of the Nerds, you’ve heard of Robert X. Cringely. And if you read this piece the whole way through, I’ll tell you where Robert X Cringely actually came from (hint: it’s not his real name).

Lately Cringely has been focused on the future of the US computer industry, with particular focus on the big guns such as IBM and HP, and claims the future isn’t so bright.

Of course he is focused on what this means for the good old US of A, but it’s also worth looking beyond that and seeing the decline’s effect internationally.

The Cringe somewhat recently predicted massive IBM layoffs, and, well, he wasn’t wrong. That had him thinking about the impact that offshoring and foreign workers using H-1B visas have on American workers and their companies. If you have US blinders on, you’d agree it’s not good. If you have a world view, you may have a totally different perspective. The entire world has a right to participate in and influence high tech.

Seeds sown

The seeds for the decline of the American computer industry were actually sown at its inception. “The truth is that much (but not all) of the American technology industry is being led by what my late mother would have called “assholes.” And these are needlessly destroying the very industry that made them rich. It started in the 1970s when a couple of obscure academics created a creaky logical structure for turning corporate executives from managers to rock stars, all in the name of “maximizing shareholder value,” Cringely wrote.

He then looks at the essence of corporate capitalism, and the overriding quest to maximize shareholder value. Forget about Marx’s theory of the self-destructive nature of capitalism. Cringely has a different take. He argues that: “Maximizing shareholder return is bad policy both for public companies and for our society in general.” He takes the case of Jack Welch as an example when he told the Financial Times in 2009: “Shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy… your main constituencies are your employees, your customers, and your products. Managers and investors should not set share-price increases as their overarching goal […] Short-term profits should be allied with an increase in the long-term value of a company.”

But what else is causing the US computer industry to be in the dire straits according to Cringely? First off he explains how taking the work offshore in order to better align costs is hurting the product due to the lowering of the quality. As soon as the customer is annoyed brand loyalty can be forgotten. Secondly, he speaks about the way companies are treating their employees by stifling their “ambition and desire to excel” which in turn leads to a worse performance. He then turns his focus to IBM and HP and says that these two companies “are failing to recognize that a big part of their business has become a commodity.” This is what makes the industry vulnerable and he argues that it’s only a matter of time until a company understands that IT service is a need that isn’t going away. “We are at a very dangerous period of time in computer history and the storied companies that made most of that history don’t even see it.  That’s because they are fixated on the vision of their leaders and their leaders are fixated on visions of their own retirements coming an average of four years from today.”

The answer

I’m not sure I agree with the Cringley’s analysis. Let’s look at a few tech leaders. IBM owns the mainframe market, which is still important. Microsoft owns productivity software and the PC. Google owns search (and so much else). Apple is considered the hippest, most innovative of them all, and then there’s Facebook.

The key to a strong position is innovation and controlling the ideas that move the market forward. And here Cringely offers a perfect example. “In 1989 when Sony bought Columbia Pictures for $4.3 billion, many in Hollywood thought the end of American entertainment hegemony had begun. But it didn’t happen. It didn’t happen because the value in Hollywood lies almost entirely in the people who work in the entertainment industry — people who mainly lived at that time in Southern California,” Cringley wrote.

World view

Cringely misses a few points when talking about the international tech sphere. First, the US is the most influential country driving the technology industry, and it still continues to innovate. To want to entirely rule this business is a bit selfish, and protecting legacy companies like IBM and HP is less important than fostering innovation.

That said, the industry has developed because it is a worldwide industry. US companies have outsourced millions of jobs to India, and now Indian thinkers are driving new startups in the US – and even running Microsoft!

The Cringely backstory

I mentioned I would tell you where Robert X. Cringely came from. This was a pseudonym for an InfoWorld gossip columnist. The origin was actually a magazine called Micro MarketWorld which had a field editor named Al Cringely. He was there to screens calls staffers didn’t want to take. “Oh, you need to talk to our field editor, Al Cringely.” “How can I get ahold of him? I’m not sure. He’s in the field.”

Robert X. was Al’s brother, and several people wrote as Bob, the most well-known being Mark Stephens, who refers to himself as Cringely to this day.