James Harding's view from the valley

So it's President Gates now, is it? Which must mean the Clinton administration is moving to Seattle.

When network computers and thin clients were first mooted, then administration is moving to Seattle. indirect channel worried. Lower prices may mean more sales, but they will also mean less absolute margin and more competition among retailers, pushing the margin down further.

Not so. US distributors are making plenty of money from thin clients.

Support costs are lower and corporates are buying from their trusted channel partners. Vendors love the channel because the volume is unlimited and their costs go down. If this happens in the UK, anyone in the market early could be on to a winner.

Lou for you

IBM CEO Lou Gerstner has become a guru in Silicon Valley. Admittedly, he has done a great job of turning IBM into a more modern Big Blue which can respond quickly to technological change, but the elite of Silicon Valley keep themselves to themselves. An elite clique, I suppose. But Gerstner works at some company in New York State. Only he and that bloke in Redmond, Washington, are adored by Valley techies.

His latest move is to spend $200 million on an ad campaign - that's a lot of money, even for IBM. The idea is to promote IBM as the company that can provide electronic commerce for any business.

Some observers say the promotion is too simple, some say it is too detailed and others say it is impressive. For $200 million it should be, but in my opinion IBM has succeeded. Not because the campaign is entertaining or impressive. It is because people are talking about it.

Illicon valley

Silicon Valley is unique. In other parts of the US, you can buy anything and get it delivered, but where else in the world can you get house calls to cure household appliances?

Sickmac.com caters for the Apple fanatic with poorly hardware. Get in touch with these people and they will send a medic around to anywhere in the San Francisco area to cure the ailment. Only in America? Only in Silicon Valley.

York on the wild side

But perhaps Silicon Valley is the wrong place for technology companies. According to venture capitalists and assorted big cheeses, New York's Silicon Alley is the place to be.

People are throwing their money at startups in the Times Square area of Manhattan.

It seems Silicon Alley is competing with San Francisco's South of Market area - nicknamed Multimedia Gulch - as a centre for technology media companies.

Seven hundred new media businesses are based in Silicon Alley, according to Coopers & Lybrand, and the number of jobs there should double by the year 2000.

California is arguably the best place in the US to live and work, but it is not the only place to invest. Accountants say New York's venture capital deals were worth just over a fifth of the $2.3 billion spent in Silicon Valley in 1996. Although it is the place to be, watch out for Silicon Alley's upstart startups.

Tour point

Anywhere that has anything interesting in America always ends up being invaded by busloads of tourists. Gray Line has begun offering tours of Silicon Valley, including visits to the worthwhile Tech Museum of innovation.

The trip, called Bizarre, Bytes and Bargains, also goes past the Great Mall of the Bay Area.

If you fancy the real Silicon Valley experience, I would suggest taking the tour and spending the whole day thinking about computers. Then sit in traffic on Highway 101 for two hours, spend another two hours wondering why everyone else seems to be so rich in Silicon Valley, and finally get home to watch TV, where there are 500-odd channels with nothing on - except for computer news.

Dell it like it is

At a time when direct sales are taking all the business and Dell is everyone's favourite company, it is refreshing to hear this story. Major League baseball is the authority in charge here - it is revered as passionately as the Football Association is disliked. And it buys Dell hardware.

But not for long. A New York branch of Computerland has just won the business. When the head of baseball gets frustrated because his machine crashes, it can actually be bothered to help. Strike three, Dell, you're out! is the expression, I believe.

Bill we meet again

Following negotiations with the Department of Justice, Microsoft has announced it will be acquiring the Federal Government of the US for an undisclosed sum, read a press release I received recently.

The US will become a wholly owned division of Microsoft and is expected to be profitable by Q4 1999. Quadrupling his salary, Bill Clinton has accepted a position as vice-president of Microsoft, reporting directly to Gates. Microsoft will not move the US government to Redmond for the foreseeable future, but the Senate will be abolished, said Gates. 'Microsoft is not a democracy and look how well we are doing,' he said. Microsoft representatives said users of the US can expect lower taxes and more services as a result of the acquisition.

Like one of Oracle CEO Larry Ellison's speeches, it was amusing and ridiculous but frighteningly plausible at the same time.

James Harding is US editor of VNU Newswire, based in San Francisco. He can be reached at [email protected] or on 00 1 415 306 0879.