6 ms·

The U.S. computer industry is dying

60 points by ableal 11y ago

heimatau 11y ago
I like the first half talking about the poor decision to link stock price with CEO's performance. Also, his ultimate conclusion is that the USA lost manufacturing industry and half of the car industry, but it doesn't have to lose the technology industry (Cringely thinks if the status quo is kept, the USA will indeed lost the tech industry). After reading his article, I strongly think Microsoft is positioned to realize this. Their CEO recently said something of this effect, 'Our goal is to solve more of our customers problems everyday. So that they can do things that add value in the world.' It's how I've viewed Apple (minus the past two years) and I think MSFT is on the right track.
- sounds 11y ago
  I'd love it if you documented some of the following: • 'Our goal is to solve more of our customers problems everyday. So that they can do things that add value in the world.' • (Separately) How Microsoft is on the right track. • How you've viewed Apple (minus the past two years)
  - heimatau 11y ago
    Sure. Point 1: " revealing the company’s new, official mission statement: To “empower every person and every organization on the planet to achieve more.”" Source: http://www.geekwire.com/2015/exclusive-satya-nadella-reveals-microsofts-new-mission-statement-sees-more-tough-choices-ahead/ http://www.geekwire.com/2015/exclusive-satya-nadella-reveals... Point 2: Microsoft is shifting to create scaled services that solve various problems (Azure, CRM, mobile first campaign, etc). Point 3: I've viewed Apple that simplified the users' experience with computers and made it easier for their users to 'do more' as Nadella has been saying in the press. Apple did a solid job but unless they find other ways to add value to their users lives, their competition will squeeze most of the market share. *Note: I understand that Apple has a monopoly on the premium smartphone sales (~75% last time I checked) but this can all easily changed due to Moore's Law. Ie., most desktops and laptops sucked 10 years ago but now, they all are fairly solid products.
- ableal 11y ago
  > I like the first half That's actually why I tossed this in the submissions queue. I hadn't seen before the shareholder value / CEO compensation tuple connected to an academic paper: "[...] dating back to 1976 [...] when Michael Jensen and William Meckling of the University of Rochester published in the Journal of Financial Economics their paper Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure."
apalmer 11y ago
i am somewhat conflicted on the article. on the one hand his arguments are almost all logically weak, they just aren't compelling in most cases. They are mostly emotional appeals more than logic. on the other hand i actually agree with a lot of what he is saying so there is that...
- tjradcliffe 11y ago
  And when have emotional appeals ever let anyone down? :-) Sounds like a valuable opportunity to practice Bayesian reasoning. One thing I like to do in situations like this is see if I can figure out any data that contradict my emotional response, so I can build a data-driven case that makes what seems to be emotionally right as implausible as possible. If you're a Bayesian, you've got to go with what is most plausible according to the data. Your emotions are data about you, which may be really relevant in some cases, but probably not in the case of international trade...
  - escherplex 11y ago
    'Fuzzy logic' may be a better fit since individual subjectivity isn't always that amenable to quantification. There you can wind up with results that look stochastic and range from 0 to 1 but technically are the just numeric values assigned to value judgments. You probably know the text book example where the 18YO who views 40 as 'old' assigns 29 a value of .73 if what has been defined as 'young' is < 26. Something else to play with...
strictnein 11y ago
> "USA IT workers make about 10 times the pay and benefits that their counterparts make in India." There's medium to high quality workers in India that only cost companies ~$15k / year? Nothing I've ever read indicates that. Always seen $25-$30k/year cited, with the number steadily increasing every year.
- jlgaddis 11y ago
  > "... pay and benefits ..." (emphasis added) I'm guessing the benefits we in the USA get are much better than in India.
  - strictnein 11y ago
    Yes, that was accounted for. Pay and benefits for a mid-level US dev is probably in the $140-$150k range. $90-$100k in pay. $40-$50k in 401k/Retirement, Health, PTO, Bonus, etc. 1/10th of that is ~$15k
TheMagicHorsey 11y ago
This guy is not smart. The tech industry is only expanding. Not only in terms of total revenues, but also total employment. In fact its one of the few sectors where employment is increasing. This guy is not educated in what he is talking about. His narrative about American manufacturing is wrong too. American manufacturing has only increased almost every decade since WWII. There has not been a decrease. What HAS decreased is employment in manufacturing. But that decrease has happened because of automation. Is that a bad thing? You know, we used to be 70% employed in agriculture, but then we figured out how to use machines to reduce the people required by an order of magnitude. That's how we had enough people available to become a manufacturing power. Now we are a service/tech power because people are slowly not needed in robot factories. Employment isn't the goal of an economy. Production is. We can give people a basic income if necessary, if robots are doing everything. But we shouldn't artificially boost employment where it isn't needed. This guy is supposed to be a tech author and he's talking like a Luddite. In the end I think this guy is just warm in his pants because he doesn't like so many foreign looking people in the industry he covers. Well, its too bad. The cat is out of the bag. Everyone knows how to program and make tech now. You either bring them here, or they'll go work for tech conglomerates in China, India, and Europe. All the colored faces in Google and Facebook aren't there because they are accepting less money than American graduates--they are getting paid a lot more than most graduates would get in their random IT jobs around the country. We are hiring the best of the best for our tech sector. That's good for America, and keeps America ahead of the competition.
- adventured 11y ago
  He's not off by a subtle amount either. Per the Fed, total US manufacturing output has gone from $1.5 trillion in 1975, to about $3.5 trillion today (in adjusted dollars). It's up somewhere between 50% and 70% since 1992, depending on how you calculate it. The US is the #2 manufacturer globally, China finally overtook the US just a couple of years ago. Output per manufacturing worker has gone from $80k in 1980, to nearly $250,000 today. http://i.imgur.com/lA9USwE.jpg http://i.imgur.com/lA9USwE.jpg
  - s73v3r 11y ago
Consultant32452 11y ago
I get so tired of this "sky is falling" crap. I've seen the outsourcing, I've seen the H1B fraud, I've seen the shit performance from IBM and virtually every other household name IT consulting firm out there. I've even seen the Google/MSFT/Apple salary collusion scandal. But you know what? In spite of ALL OF THAT five out of the top ten salaries for bachelor's degrees are all IT related. http://www.payscale.com/college-salary-report/majors-that-pay-you-back/bachelors http://www.payscale.com/college-salary-report/majors-that-pa... IT unemployment has been 2% in my region for nearly a decade. That means everyone with any skills who wants a job has a job. I can hardly imagine how you could try to screw over IT workers any harder than is being done by the corporate big wigs and yet IT is still one of the best places to be. And if it gets bad? God help us, we can just unionize. But it's hard to convince people to organize and complain when they're making more money and enjoying more benefits than most people on the planet.
- colordrops 11y ago
  I'm not sure what your point is. I'm reading it as: "You shouldn't be complaining, because you are being fucked, but you are being fucked over less than others. So stop complaining." Is that what you are saying?
  - Consultant32452 11y ago
    My point is that we're not actually being fucked. In spite of people trying to fuck us over right and left, it would appear we're winning.
    - s73v3r 11y ago
      Then you'd be completely wrong. We are being fucked.
      - Consultant32452 11y ago
        In what way?
- 11y ago
NoFormFactors 11y ago
We have, and actively are moving away from "form factors". Technology is not necessary. Enjoy. ;-)
- hartator 11y ago
  Following the same logic, human life is not necessary. Technology, in the broad meaning of the term, is what make us men and not animals.
akssri 11y ago
> USA IT workers make about 10 times the pay and benefits that their counterparts make in India. I won’t suggest USA workers are 10 times better than anyone, they aren’t. It must be noted that the Indian rupee is one of the most undervalued currencies in the world, and so on purchasing parity terms, it'd be more like 2-3 times.
aytekin 11y ago
"Do HP’s or IBM’s whole organization understand the “value” of their service? It is only a matter of time until a company emerges that truly understands the value of IT service, because that need isn’t going away." Not a single company but their business is being eaten by all these thousands of new small SaaS businesses that cost a fraction of what they charge for their terrible enterprise software. We are only focused on a niche but we do it amazingly and we have customers from virtually all big businesses. These companies don't need IBM any more, because employees in these companies can now do their forms on JotForm, their CRM on Salesforce, their communication over Slack, their emails on google apps and hundreds of other products that focus on only one thing but do it amazingly well.
anupshinde 11y ago
This guy has got many facts wrong here. And why is he using HP/IBM examples to represent the industry - These co's have earned some disrespect quite some time back. I believe the opposite is true. The US computer industry would have been dead out of cost and competition if it did not embrace offshoring. Instead what it is doing now is taking a bit of hit and staying in control. It has generated more leaders than just workers. I can only wonder what country would be the leader in the computer industry within a decade of the US banning offshoring or H1Bs.
PythonicAlpha 11y ago
Basing the compensation of CEOs on the stock price is a real problem. I also see a link to politics. In politics we have a similar situation: Most politicians (at least in our country) are planning for one or two terms of office. After that, they are eligible for a pension big enough for them. And when this is not enough, they also can get money from corporations just by being a consultant after their time in office. So, the plan is just short term: Get into the parliament, get a big seat as secretary if possible or other good job and after just a few years you don't have any trouble in live any more, money-wise. This can be best reached, by short-term thinking. Be helpful to the right people, be a "party soldier" (as it is called in Germany) that does what the party top wants from you. Own thinking, or long-term success or even thinking, what is best for the people, is counter-productive in this scheme. So what we more and more get, are short-term solutions, that only make you popular for a short-term but does not help with the long-term problems. Troublesome decisions are shifted into the future, when you are out of office, even when the troubles will increase meanwhile. The same short-term thinking is produced in CEOs today. A CEO just has to get the job and be there, for 4-8 years to earn enough money, most people don't have in a lifetime. So what does he do? Make troublesome decisions, or decisions, that cost money for the next 3-5 years and will pay maybe in 6 years, maybe later?? You know the answer. I think, this short-term thinking and the greed, that is injected in many of us today, are the reason of the most problems we face today.
hga 11y ago
As Bloomberg Business puts it, "How Bill Clinton Helped Boost CEO Pay" (http://www.bloomberg.com/bw/stories/2006-11-26/how-bill-clinton-helped-boost-ceo-pay http://www.bloomberg.com/bw/stories/2006-11-26/how-bill-clin...), or more succinctly: In 1993, Section 162(m) of the U.S. Internal Revenue Code was passed into law. The intent of this law was to reign in outsized executive compensation by eliminating the tax-deductibility of executive compensation above $1 million unless the excess compensation was performance-based. (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=942667 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=942667). I'll also note that those running companies are, by definition in the US, responsible for providing good returns to the owners, AKA stockholders. And it's been noted since 1941 or so, in James Burnham's The Managerial Revolution, that there's a divergence between the interests of managers and owners, so efforts like Section 162(m) are understandable.

60 points by ableal 11y ago

I like the first half talking about the poor decision to link stock price with CEO's performance. Also, his ultimate conclusion is that the USA lost manufacturing industry and half of the car industry, but it doesn't have to lose the technology industry (Cringely thinks if the status quo is kept, the USA will indeed lost the tech industry). After reading his article, I strongly think Microsoft is positioned to realize this. Their CEO recently said something of this effect, 'Our goal is to solve more of our customers problems everyday. So that they can do things that add value in the world.' It's how I've viewed Apple (minus the past two years) and I think MSFT is on the right track.

sounds 11y ago
I'd love it if you documented some of the following: • 'Our goal is to solve more of our customers problems everyday. So that they can do things that add value in the world.' • (Separately) How Microsoft is on the right track. • How you've viewed Apple (minus the past two years)
- heimatau 11y ago
  Sure. Point 1: " revealing the company’s new, official mission statement: To “empower every person and every organization on the planet to achieve more.”" Source: http://www.geekwire.com/2015/exclusive-satya-nadella-reveals-microsofts-new-mission-statement-sees-more-tough-choices-ahead/ http://www.geekwire.com/2015/exclusive-satya-nadella-reveals... Point 2: Microsoft is shifting to create scaled services that solve various problems (Azure, CRM, mobile first campaign, etc). Point 3: I've viewed Apple that simplified the users' experience with computers and made it easier for their users to 'do more' as Nadella has been saying in the press. Apple did a solid job but unless they find other ways to add value to their users lives, their competition will squeeze most of the market share. *Note: I understand that Apple has a monopoly on the premium smartphone sales (~75% last time I checked) but this can all easily changed due to Moore's Law. Ie., most desktops and laptops sucked 10 years ago but now, they all are fairly solid products.
ableal 11y ago
> I like the first half That's actually why I tossed this in the submissions queue. I hadn't seen before the shareholder value / CEO compensation tuple connected to an academic paper: "[...] dating back to 1976 [...] when Michael Jensen and William Meckling of the University of Rochester published in the Journal of Financial Economics their paper Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure."

apalmer 11y ago

i am somewhat conflicted on the article. on the one hand his arguments are almost all logically weak, they just aren't compelling in most cases. They are mostly emotional appeals more than logic. on the other hand i actually agree with a lot of what he is saying so there is that...

tjradcliffe 11y ago
And when have emotional appeals ever let anyone down? :-) Sounds like a valuable opportunity to practice Bayesian reasoning. One thing I like to do in situations like this is see if I can figure out any data that contradict my emotional response, so I can build a data-driven case that makes what seems to be emotionally right as implausible as possible. If you're a Bayesian, you've got to go with what is most plausible according to the data. Your emotions are data about you, which may be really relevant in some cases, but probably not in the case of international trade...
- escherplex 11y ago
  'Fuzzy logic' may be a better fit since individual subjectivity isn't always that amenable to quantification. There you can wind up with results that look stochastic and range from 0 to 1 but technically are the just numeric values assigned to value judgments. You probably know the text book example where the 18YO who views 40 as 'old' assigns 29 a value of .73 if what has been defined as 'young' is < 26. Something else to play with...

strictnein 11y ago

> "USA IT workers make about 10 times the pay and benefits that their counterparts make in India." There's medium to high quality workers in India that only cost companies ~$15k / year? Nothing I've ever read indicates that. Always seen $25-$30k/year cited, with the number steadily increasing every year.

jlgaddis 11y ago
> "... pay and benefits ..." (emphasis added) I'm guessing the benefits we in the USA get are much better than in India.
- strictnein 11y ago
  Yes, that was accounted for. Pay and benefits for a mid-level US dev is probably in the $140-$150k range. $90-$100k in pay. $40-$50k in 401k/Retirement, Health, PTO, Bonus, etc. 1/10th of that is ~$15k

TheMagicHorsey 11y ago

This guy is not smart. The tech industry is only expanding. Not only in terms of total revenues, but also total employment. In fact its one of the few sectors where employment is increasing. This guy is not educated in what he is talking about. His narrative about American manufacturing is wrong too. American manufacturing has only increased almost every decade since WWII. There has not been a decrease. What HAS decreased is employment in manufacturing. But that decrease has happened because of automation. Is that a bad thing? You know, we used to be 70% employed in agriculture, but then we figured out how to use machines to reduce the people required by an order of magnitude. That's how we had enough people available to become a manufacturing power. Now we are a service/tech power because people are slowly not needed in robot factories. Employment isn't the goal of an economy. Production is. We can give people a basic income if necessary, if robots are doing everything. But we shouldn't artificially boost employment where it isn't needed. This guy is supposed to be a tech author and he's talking like a Luddite. In the end I think this guy is just warm in his pants because he doesn't like so many foreign looking people in the industry he covers. Well, its too bad. The cat is out of the bag. Everyone knows how to program and make tech now. You either bring them here, or they'll go work for tech conglomerates in China, India, and Europe. All the colored faces in Google and Facebook aren't there because they are accepting less money than American graduates--they are getting paid a lot more than most graduates would get in their random IT jobs around the country. We are hiring the best of the best for our tech sector. That's good for America, and keeps America ahead of the competition.

adventured 11y ago
He's not off by a subtle amount either. Per the Fed, total US manufacturing output has gone from $1.5 trillion in 1975, to about $3.5 trillion today (in adjusted dollars). It's up somewhere between 50% and 70% since 1992, depending on how you calculate it. The US is the #2 manufacturer globally, China finally overtook the US just a couple of years ago. Output per manufacturing worker has gone from $80k in 1980, to nearly $250,000 today. http://i.imgur.com/lA9USwE.jpg http://i.imgur.com/lA9USwE.jpg
- s73v3r 11y ago

Consultant32452 11y ago

I get so tired of this "sky is falling" crap. I've seen the outsourcing, I've seen the H1B fraud, I've seen the shit performance from IBM and virtually every other household name IT consulting firm out there. I've even seen the Google/MSFT/Apple salary collusion scandal. But you know what? In spite of ALL OF THAT five out of the top ten salaries for bachelor's degrees are all IT related. http://www.payscale.com/college-salary-report/majors-that-pay-you-back/bachelors http://www.payscale.com/college-salary-report/majors-that-pa... IT unemployment has been 2% in my region for nearly a decade. That means everyone with any skills who wants a job has a job. I can hardly imagine how you could try to screw over IT workers any harder than is being done by the corporate big wigs and yet IT is still one of the best places to be. And if it gets bad? God help us, we can just unionize. But it's hard to convince people to organize and complain when they're making more money and enjoying more benefits than most people on the planet.

colordrops 11y ago
I'm not sure what your point is. I'm reading it as: "You shouldn't be complaining, because you are being fucked, but you are being fucked over less than others. So stop complaining." Is that what you are saying?
- Consultant32452 11y ago
  My point is that we're not actually being fucked. In spite of people trying to fuck us over right and left, it would appear we're winning.
  - s73v3r 11y ago
    Then you'd be completely wrong. We are being fucked.
    - Consultant32452 11y ago
      In what way?
11y ago

NoFormFactors 11y ago

We have, and actively are moving away from "form factors". Technology is not necessary. Enjoy. ;-)

hartator 11y ago
Following the same logic, human life is not necessary. Technology, in the broad meaning of the term, is what make us men and not animals.

akssri 11y ago

> USA IT workers make about 10 times the pay and benefits that their counterparts make in India. I won’t suggest USA workers are 10 times better than anyone, they aren’t. It must be noted that the Indian rupee is one of the most undervalued currencies in the world, and so on purchasing parity terms, it'd be more like 2-3 times.

aytekin 11y ago

"Do HP’s or IBM’s whole organization understand the “value” of their service? It is only a matter of time until a company emerges that truly understands the value of IT service, because that need isn’t going away." Not a single company but their business is being eaten by all these thousands of new small SaaS businesses that cost a fraction of what they charge for their terrible enterprise software. We are only focused on a niche but we do it amazingly and we have customers from virtually all big businesses. These companies don't need IBM any more, because employees in these companies can now do their forms on JotForm, their CRM on Salesforce, their communication over Slack, their emails on google apps and hundreds of other products that focus on only one thing but do it amazingly well.

anupshinde 11y ago

This guy has got many facts wrong here. And why is he using HP/IBM examples to represent the industry - These co's have earned some disrespect quite some time back. I believe the opposite is true. The US computer industry would have been dead out of cost and competition if it did not embrace offshoring. Instead what it is doing now is taking a bit of hit and staying in control. It has generated more leaders than just workers. I can only wonder what country would be the leader in the computer industry within a decade of the US banning offshoring or H1Bs.

PythonicAlpha 11y ago

Basing the compensation of CEOs on the stock price is a real problem. I also see a link to politics. In politics we have a similar situation: Most politicians (at least in our country) are planning for one or two terms of office. After that, they are eligible for a pension big enough for them. And when this is not enough, they also can get money from corporations just by being a consultant after their time in office. So, the plan is just short term: Get into the parliament, get a big seat as secretary if possible or other good job and after just a few years you don't have any trouble in live any more, money-wise. This can be best reached, by short-term thinking. Be helpful to the right people, be a "party soldier" (as it is called in Germany) that does what the party top wants from you. Own thinking, or long-term success or even thinking, what is best for the people, is counter-productive in this scheme. So what we more and more get, are short-term solutions, that only make you popular for a short-term but does not help with the long-term problems. Troublesome decisions are shifted into the future, when you are out of office, even when the troubles will increase meanwhile. The same short-term thinking is produced in CEOs today. A CEO just has to get the job and be there, for 4-8 years to earn enough money, most people don't have in a lifetime. So what does he do? Make troublesome decisions, or decisions, that cost money for the next 3-5 years and will pay maybe in 6 years, maybe later?? You know the answer. I think, this short-term thinking and the greed, that is injected in many of us today, are the reason of the most problems we face today.

hga 11y ago

As Bloomberg Business puts it, "How Bill Clinton Helped Boost CEO Pay" (http://www.bloomberg.com/bw/stories/2006-11-26/how-bill-clinton-helped-boost-ceo-pay http://www.bloomberg.com/bw/stories/2006-11-26/how-bill-clin...), or more succinctly: In 1993, Section 162(m) of the U.S. Internal Revenue Code was passed into law. The intent of this law was to reign in outsized executive compensation by eliminating the tax-deductibility of executive compensation above $1 million unless the excess compensation was performance-based. (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=942667 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=942667). I'll also note that those running companies are, by definition in the US, responsible for providing good returns to the owners, AKA stockholders. And it's been noted since 1941 or so, in James Burnham's The Managerial Revolution, that there's a divergence between the interests of managers and owners, so efforts like Section 162(m) are understandable.