A History of Silicon Valley

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These are excerpts from Piero Scaruffi's book
"A History of Silicon Valley"

(Copyright © 2016 Piero Scaruffi)

The Selfies (2011-16)

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The Age of the Smartphone App

The importance of the "app store" was skyrocketing by the day, just like the availability of applications had favored Windows on the desktop, except that this time around Microsoft was on the losing end. In 2013 Microsoft announced the acquisition of Nokia's mobile business within two years the two companies introduced state-of-the-art smartphones such as the Nokia Lumia 1020, equipped with a camera worthy of professional digital cameras, and the Nokia Icon, whose user interface was as advanced (if not more advanced) than the Android's and the iPhone's ones. Unfortunately, Nokia's smartphones were running Windows Phone, and Windows still did not have the same apps available to Android and iPhone. No matter how technologically advanced, Nokia's smartphones were doomed to be outsiders.

In 2013 worldwide sales of smartphones passed the one billion mark, posting a 38.4% increase from the previous year, with Samsung accounting for 31.3% of the units, followed by Apple with 15.3%.

The first ever decline in smartphone sales happened in the last quarter of 2017, when only the Chinese companies Huawei and Xiaomi (among the top five manufacturers) posted market growth: 408 million units were sold in the fourth quarter of 2017, a 5.6% decline from the previous year. In 2018 the market grew very little. The big news of 2018 was the shrinking market share of Apple: Samsung retained the top spot (20.5% of the market), followed by Apple (14.1%) and then by the Chinese (Huawei at 10.5%, Xiaomi at 7.4% and Oppo at 7.3%). Almost all of them (86% of all smartphones) used Google's Android operating system. Entering the smartphone market was not easy, as Andy Rubin of Android fame found out: he launched Essential in 2017 to develop a new kind of smartphone, but in 2018 was already going out of business. In 2017 Qualcomm still owned 42% of the market for smartphone chipsets (in terms of revenues), thanks to its popular Snapdragon series, followed by Apple with 20% and MediaTek with 14%, Samsung with 11% and Huawei with 8%. However, a number of lawsuits filed by Apple against Qualcomm and viceversa threatened Qualcomm's long-term survival. In 2017 Broadcom (now based in Singapore) tried to acquire Qualcomm (which would have been the largest merger of chipmakers ever), but the US government vetoed the deal on national-security grounds. This Broadcom was the new name of Avago, which had acquired Javelin in 2013, Cyoptics in 2013, LSI in 2014 and the real Broadcom in 2015. In 2018 this new Broadcom relocated back to San Jose.

2G (1992) had marked the transition from analog to digital voice, 3G (2001) had enabled Internet browsing, and 4G had enabled basic video streaming. LTE Advanced, standardized by the 3GPP in 2011, increased 4G bandwidth by aggregating up to five LTE data streams. The era of LTE Advanced dawned with Qualcomm's Snapdragon LTE modems, notably the X7 first incorporated in phones in mid 2014 that allowed a data transmission speed of 300 Mbps. LTE Advanced allowed users to download a full movie in about six minutes. Now the new goal was 5G, to enable high-definition video streaming (e.g., downloading a movie in a few seconds instead of minutes). In 2008 Erdal Arikan in Turkey had invented "polar coding" technology, which came to be backed by China's Huawei (since 2010) and other Asian manufacturers. Qualcomm responded with a modern version of LDPC (low-density parity check), a technology developed in 1963 by Robert Gallager at MIT and widely used for wi-fi, and rediscovered in 1996 by David MacKay of Cambridge University and Radford Neal of University of Toronto. Exploiting these new technologies, 5G had the potential to be up to 100 times faster than 4G. Qualcomm announced in October 2016 the Snapdragon X50, the first 5G modem, i.e. the first modem that supported radio communications of very high frequency (i.e. short wave-length).

The first 7-nanometer system-on-a-chip (SoC) for mobile devices was introduced in September 2018 by Apple, hailed as an impressive jump in performance. In October, Huawei unveiled its first 7nm mobile processor, the Kirin 980, but with a much lower performance. Both were ARM-based. Samsung's 5G chipset was the Exynos Modem 5100. In February 2019 Qualcomm unveiled the 7nm Snapdragon 855 for 5G; and in April 2019 Qualcomm and Apple announced they had settled their lengthy royalty lawsuit that had threatened to disrupt their partnership (Apple paid Qualcomm quite a bit of money). A few hours later, Intel, which had become the only supplier of modem chips to Apple, announced that it was leaving the 5G business, basically ceding that market to Qualcomm. Apple, which was increasingly developing its own chips, acquires Intel's smartphone modem business.

In theory, Motorola (now owned by China's Lenovo) was the first company to sell a 5G phone, the Moto Z3 5G, in April 2019, but this was just the Moto Z3 (a 4G handset from 2018) coupled with an additional device called for 5G compatibility, and only worked with Verizon's 5G network (which at the time of the phone's introduction only covered parts of Chicago and Minneapolis). A few days later, Samsung in South Korea introduced the Galaxy S10 5G, and began mass-producing the Exynos Modem 5100. LG in South Korea introduced the V50 ThinQ 5G, based on a Snapdragon 855, in May. The first 5G phones that went on sale in China were: the Oppo Reno 5G (April 2019), the Huawei Mate X (May), the Vivo Next 5G, the Xiaomi Mix3 5G (May) and the ZTE Axon 10 Pro 5G. They were all based on the Snapdragon 855 except the Huawei, which used Huawei's Kirin 980 processor and Balong 5000 5G modem chip.

These 5G phones of 2019 were not very useful: they were big and heavy because they had to provide both 4G and 5G electronics; they had short battery life; they worked only with the carrier selling them; and didn't work in most places because the carriers were just beginning to lay down 5G networks.

The 5G ecosystem extended all over the USA. For example, radio frequency integrated circuits were produced by San Jose-based Broadcom, by Boston-based Skyworks (founded in 2002), and by North Carolina-based Qorvo, formed from the merger of Oregon-based TriQuint Semiconductor (founded in 1985 as a subsidiary of Tektronix) and North Carolina-based RF Micro Devices (founded in 1991 by former engineers of Boston-based DSP-maker Analog Devices, which in turn had been founded by MIT graduates in 1965). And of course the whole smartphone industry depended on the foundations provided by San Diego-based Qualcomm (chips) and by British-based ARM (designs), acquired by Japan's Softbank in 2016. ARM didn't build any chips anymore, but its designs were at the core of virtually all smartphone chips. In 2013 ARM announced that 10 billion new chips were based on ARM design, bringing the cumulative total for ARM-based chips to over 50 billion; and another 50 billion were added between 2013 and 2017, bringing the worldwide total of ARM-based chips to 100 billion (more than ten times the human population). By 2019, all the major smartphone chips, from the Qualcomm Snapdragon to the Huawei TaiShan, from the Samsung Exynos to the Apple A10, were based on ARM designs.

While apps continued to proliferate in all possible fields, the biggest success stories had to do with extending the social network enabled by smartphones.

Tango, founded in 2009 in Mountain View by Eric Setton and Israeli serial entrepreneur Uri Raz, provided a voice and video messaging mobile platform for all smartphones, competing with Apple's proprietary Facetime. The app went viral so quickly that Tango already had one million users after just ten days of launching (Tango later added entertainment, gaming and ecommerce and became a "unicorn" after Alibaba invested in it in 2014).

Snapchat was started by Stanford students Reggie Brown and Evan Spiegel in 2011 for smartphone users to share photos and videos.

In the age when the public was increasingly concerned about privacy, Snapchat pledged to delete every messages from its servers within a few seconds.

This was, after all, the age of the "selfie", the self-portrait photograph posted on social media for all your friends to see how cute and cool you are.

WhatsApp and Snapchat (and WeChat in China) competed for the same market, but were fundamentally different business models. WhatsApp allowed users to send and receive texts, voice, pictures, audio and video. WhatsApp charged a tiny yearly subscription to its users. WhatsApp was only available on phones, not on computers. WhatsApp served a wide range of age groups. WhatsApp had no advertisements. Snapchat was also available on Apple and Android devices. Snapchat had some advertisement but was absolutely free. Snapchat deleted from the memory of the device videos and photos within 10 seconds of sending them. Snapachat was the perfect tool for "selfie" maniacs and therefore had an audience mainly of young people.

The mid-2010s were the years of the messaging bubble: in 2017 apps for messaging and chatting enjoyed a collective valuation of hundreds of billions of dollars. In 2014 WhatsApp had 55 employees when Facebook acquired it for $19 billion. In 2016 the biggest tech IPO was a messaging app: Line. Snap (previously called Snapchat) lost half a billion dollars in 2016 but it was worth over $30 billion in 2017.

The company that had perhaps the biggest trouble adjusting to the new world was Yahoo! In 2012 it hired Marissa Mayer from Google, the rare case of a major CEO coming from the ranks and files of a high-tech company. She launched into an acquisition spree of her own, purchasing 16 startups in her first year at the helm of the company. The biggest purchase (2013) was blogging platform Tumblr, founded in New York in 2007 by Marco Arment and David Karp (who was barely 20). This was not the first attempt by Yahoo! to enter the blogging sphere. Yahoo! had already purchased the most famous blogging site of 1999, Geocities, only to cause its rapid demise. Just like then, Yahoo! was more interested in Tumblr's customer base of 105 million bloggers than in contributing to progress in this technology. And, just like in the age of Geocities, it was still not clear how these platforms were supposed to make money. Most of the other acquisitions were for mobile applications and services, like the gaming platform PlayerScale and the video platform Qwiki. Among them was London-based "whiz kid" Nick D'Aloisio's news aggregator Summly (originally called Trimit and developed for iOS in 2011, when he was still 15), based on Artificial Intelligence software coming from SRI International. Just like with Google, this was also a way to hire top software engineers (the so-called "acqui-hire" method).

Nonetheless, the glorious dotcom pioneer couldn't compete with the new generations and in July 2016 telecom giant Verizon purchased Yahoo!. Two months later the final scandal rocked Yahoo: it was forced to admit that in 2014 hackers stole the private information of half a billion users: names, email addresses, telephone numbers, dates of birth, passwords. It was considered the largest data breach of all times until three months later, when Yahoo admitted an even bigger data breach that affected about one billion accounts. In June 2017 the name Yahoo! ceased to exist as Verizon started dismembering it and Mayer resigned.

The mother of all applications was the "personal assistant", or, better, the voice-controlled contextual search tool. Apple had introduced Siri with the iPhone 4S of 2011 after merging a personal-assistant technology acquired from Siri with the speech-recognition technology acquired from Nuance. During the year 2012 Apple's Siri was joined by a number of tough competitors: Samsung's S-Voice, launched in May 2012 for its Galaxy S3 smartphone; LG Quick Voice, launched in June 2012 for its Optimus Vu smartphone, and, last but not least, GoogleNow, launched in July 2012 on Samsung's Galaxy Nexus smartphone. In 2014 Amazon released Alexa, created by the same Amazon Lab126 in Sunnyvale that had made the Kindle. Microsoft followed suit in 2014 with its Cortana. In 2014 Apple's iOs8 introduced the "Hey Siri" feature that enabled any app to summon Siri; and in 2015 Uber introduced a similar feature to summon Uber from any other app.

The new generation of intelligent assistants included Kasisto (2013), an SRI International spin-off just like Siri, and Digital Genius, designed by London-based Russian-born Dmitry Aksenov, as well as some specializing in scheduling meetings, such as Clara (2013), founded by Maran Nelson and Michael Akilian in San Francisco, and X.ai (2014), founded by Dennis Mortensen in New York. In 2015 Facebook launched its own virtual assistant, M.

However, these "assistants" were still a far cry from a real "contextual and predictive technology".

Social apps for the mobile world continued to multiply. Flipagram, founded in 2013 in Los Angeles (by Raffi Baghoomian, Brian C. Dilley, Joshua Feldman, Farhad Mohit), and funded by Michael Moritz and John Doerr (who famously invested together in Google), offered an app that allowed users to quickly produce short video clips combining photos, videos, text and music. In 2014 Fyusion, founded in 2013 in San Francisco by Willow Garage alumni Radu Rusu, Stefan Holzer and Stephen Miller, debuted the mobile photo app Fyuse that pushed social media beyond panoramic snapshots and towards immersive 3D photography.

The age of the selfie quickly turned into the age of the short video. Snapchat passed 6 billion daily video views in 2015, just three years after the introduction of its video service. By then Facebook boasted 8 billion daily video views. In 2015 Google acquired Fly Labs, founded by Tim Novikoff in 2012 in New York, creator of immensely popular video-editing apps for the iPhone. Cinematique, founded by Randy Ross in 2012 in New York, provided a platform for making interactive online videos. In 2014 Shutterstock, an online marketplace for trading stock images launched in 2003 in New York by Jon Oringer, debuted an in-browser video-editing tool, Sequence. In 2016 Moviefone's founder Andrew Jarecki launched a video editing app for the iOS, KnowMe. Bitmovin, founded in 2013 in Palo Alto by one of the DASH creators, Christian Timmerer of the Alpen-Adria Universitaet Klagenfurt in Austria, delivered high-performance MPEG-DASH players for HTML5 and Flash on smartphones as well as computers.

New creative kinds of collaboration tools were introduced in the 2010s, notably: TinySpeck (later renamed Slack), founded in 2009 in Vancouver by Stewart Butterfield of Flickr fame but relocated in 2013 to San Francisco, basically a spin-off of Ludicorp, the company that developed Flickr; and HipChat, founded in 2010 in San Francisco by Chris Rivers, Garret Heaton and Pete Curley (students of Rensselaer Polytechnic Institute in New York), and acquired by Australian company Atlassian in 2012. Slack, first released in early 2014 (and worth $7 billion in 2018), was tapping into a transformation of the main decades-old form of interpersonal digital communication: email. Email had been attacked on one side by chat applications, that provided a much simpler way to carry out instant bidirectional communication than traditional email. Email itself had become less of a person-to-person communication tool and more of a machine-to-person communicaton tool and a campaign-to-the-masses communication tool, as many emails were generated by machines (not only marketing but also receipts, social-media notifications, bank statements, etc) and many emails were crafted for an audience by a Mailchimp user (Mailchimp having become the main email marketing platform, originally founded in 2001 in Georgia by Ben Chestnut). Google too had contributed in giving email a bad reputation among younger people by unnecessarily overloading Gmail (the most popular email application) with features and icons that sounded confusing, complicated and old-fashioned to kids used to one-click communications. (Microsoft was guilty of the same crime with its cumbersome and awkward Outlook's user interface). Slack was one of the tools that became popular because, indirectly, reduced email communications (in this case within a group). Probably nothing changed the workplace in those years more than Slack did. For the record, before Slack and HipChat there was Campfire, the first major web-based team collaboration tool, released in in 2006, and there was Flowdock, launched in Finland in 2009.

In 2013 Quip (founded in San Francisco by former Facebook technologist Bret Taylor and by former Google engineer Kevin Gibbs) launched a mobile office application.

In 2013 Opera's cofounder John von Tetzchner founded Vivaldi Technologies to develop a new Chromium-based browser for power users.

The dark side of the Internet came to light in 2011, when a researcher discovered that spyware developed by Carrier IQ (a company founded as Core Mobility in 2005 in Sunnyvale by former Apple engineer Konstantin Othmer) was recording detailed user behavior on smartphones sold by AT&T, Sprint, T-Mobile, Apple and Samsung, which accounted for the majority (only two major manufacturers, Nokia and Research in Motion, never used this spyware). This followed a 2010 lawsuit, in which Skyhook Wireless sued Google for patent infringement, that indirectly revealed to the public a vast and secret three-year project by Google (from 2007 until the lawsuit) to collect WiFi signals using StreetView vehicles (hence renamed "Wi-Spy vehicles" by the hacker community). Skyhook Wireless, founded by Ted Morgan in 2003 in Boston, had become the world leader in "location intelligence", i.e. the leading source of information about Wi-Fi locations. That information provides a more accurate and battery-friendly way to pinpoint a mobile user's location than GPS or cell tower triangulation, the user's location being in turn very valuable for advertisers and therefore meaning big money for search engines. Google had a vested interest in improving its knowledge and tracking of the exact location at any time of users of Android smartphones. Skyhook was candidly admitting on its website that "Wi-Fi is far more than a network connection - it's a location source." In other words, Wi-Fi had become a way to track where a mobile user was.

In 2015 former Cisco executives started Mist to provide fast reliable wireless access in places like hotels and arenas, with the additional benefit of great location accuracy so that location-aware apps can be more useful in public spaces.

In 1975 the FBI had funded the development of fingerprint scanners but it took decades for the technology to reach the consumer market. In 2011 Motorola became the first company to offer a fingerprint scanner in a smartphone (its Atrix). The fingerprint scanner used by Motorola in Atrix 4G was made by Authentec, which was acquired by Apple in 2012. Sure enough in 2013 Apple added a fingerprint scanner to the iPhone. A few months later HTC used the technology developed since 2010 by Validity (founded in 2000 in San Jose and acquired by Synaptics in 2013) for its One Max. China's Xiaomi introduced its fingerprint scanner in 2015.

Among the most funded startups of 2017 there was Opendoor Labs, founded by Keith Rabois and Eric Wu in 2014 in San Francisco, that introduced a new way for people to sell their homes. And there was AppLovin, founded in 2012 in Palo Alto by Adam Foroughi, that developed an algorithm to customize advertising on mobile devices.

click here for the other sections of the chapter "The Selfies (2011-16)"
(Copyright © 2016 Piero Scaruffi)

Table of Contents | Timeline of Silicon Valley | A photographic tour | History pages | Editor | Correspondence