Only 6 of the 20 largest software companies are in Silicon Valley | Hacker News Reader

Only 6 of the 20 largest software companies are in Silicon Valley

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Eliminating the word "Only" in the title, you get "6 of the 20 largest software companies are in Silicon Valley!"

And no other metro area has more than 1.

Maybe not on that list...but the Seattle area does have Microsoft, Amazon, and Nintendo...all very large companies.

Also Boeing which doesn't sell software but has more programmers and software engineers than most companies that do.

There are 3 in Bangalore metro, 2 in NYC metro and 2 in Dallas metro on the list.

This list is shit.

CSC, Capgemini, TCS, Infosys, Wipro, and ACS don't sell software. They sell consulting, of which actual software coding is but a part.

The same could be said about Google. For the most part, it sells advertising.

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.

GE: Core competency = training middle management. Monetization = jet engines, locomotives, formerly household appliances, etc.

Berkshire Hathaway: Core competencies = Warren Buffett, AAA credit rating, willingness to keep former owners on as managers. Monetization = insurance, furniture, candy.

WalMart: Core competency: Logistics management, supplier bargaining power. Monetization: every household good imaginable.

Nike: Core competency = advertising. Monetization = sneakers & sportswear.

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.

Looking at it in a slightly different way, Nike+ uses expertise with shoes and expertise with interaction design to sell a decent amount of hardware.

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.

Exactly. And if you prune the consulting firms (and IBM, which was founded before Silicon Valley existed), it's striking how dominant California is.

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.

Bullshit. They're all 8742 companies.

http://www.sec.gov/info/edgar/siccodes.htm

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.

SIC codes - not SEC codes. Just the easiest list to find. SIC are international.

You pointed to the SIC codes used by the SEC. It's a legacy US only system (http://en.wikipedia.org/wiki/Standard_Industrial_Classificat...). There's a seperate UN initiative called ISIC (http://en.wikipedia.org/wiki/International_Standard_Industri...)

But in any event, it's a classification for the purpose of bean counting, or meta bean counting if you will :-)

Silicon Valley is not the best place to have an enormous software company. Its the best place to have a startup.

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.

See: http://www.latimes.com/news/local/la-fi-ct-runaway12-2009jul...

But it's no worse than any other place. Meaning that if you had to pick anywhere, you'd pick the Valley.

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.

No, sir, they moved to Vegas to avoid sales tax on shipping to CA residents. They no longer have a CA nexus.

If I were a large software company, and I had to pick a headquarters... I would not pick Silicon Valley.

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.

Can we have a distributed government outsourced to India to reduce costs?

Sure. It's called exile.

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.

Except that, I notice, aside from IBM, Microsoft and SAP, I've only ever heard of the companies on that list that are from California.

he's missing a few, notably electronic arts.

The money is in the valley.

Alternatively, "30% of the 20 largest software companies are in SV".

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