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Therese Poletti's Tech Tales
Nov. 30, 2010, 9:05 a.m. EST
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So far, it's a year to thank Silicon Valley
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By Therese Poletti, MarketWatch
SAN FRANCISCO (MarketWatch) "” When Steve Jobs was 12 years old, he took a chance and called Bill Hewlett, the co-founder of Hewlett-Packard Co., at home to see if he could get some parts for a school project he was working on in the eighth grade: a frequency counter.
Intrigued by the gutsy youngster, Hewlett spoke with him for about 20 minutes, and he made sure Jobs got the parts he needed for the project. That call led to a summer job at H-P /quotes/comstock/13*!hpq/quotes/nls/hpq (HPQ 42.37, -0.23, -0.54%) , where the future co-founder of Apple Inc. /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 312.46, -4.41, -1.39%) worked at the Cupertino, Calif., campus.
Time & Life Pictures/Getty Images Apple CEO Steve Jobs poses with one of the company's first computers.
Years later, Jobs's friend and fellow Apple co-founder Steve Wozniak would also work for H-P. It was while he was a young engineer working on scientific calculators that he invented, in his own time, what became the Apple I computer. H-P turned down Wozniak's invention, which he was obligated to offer to his employer first.
Jobs has returned to his old stomping grounds, with Apple's purchase of a large chunk of the old H-P Cupertino campus. In 2006, Apple confirmed that it had purchased some of the land, and the company just completed a deal for a 100-acre portion of the space.
It's a deal that has both companies turning full circle on their storied pasts "” and it marks a shift of power in Silicon Valley.
"We now have 57 buildings in Cupertino, and our campus is bursting at the seams," said Steve Dowling, an Apple spokesman, adding that the latest purchase, of two big parcels, will "give us more room as we continue to grow."
The companies are not disclosing a sale price. A grant deed filed Nov. 10 with the Santa Clara County recorder's office noted that the transfer tax and deal value are not matters of public record.
According to recent property-tax information, one parcel had an assessed value of $9.7 million, and the second was valued at $276.4 million.
In the last few years, Apple has bought up other property in the area, about a 7-minute drive from the company's main headquarters in Cupertino. Chief Executive Jobs made a rare appearance at a city council meeting in April 2006, where he described Apple's explosive growth.
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"We have rented every scrap of building we can find in Cupertino to put our people, and they keep getting further and further away from the campus," Jobs said at the time. "So we decided many months ago that we needed to build a new campus. And we didn't think we could do it in Cupertino, 'cause there ain't a lot of apricot orchards left in Cupertino."
When Jobs gave his update to the city council, he said Apple had amassed a total of nine properties "” buying some from H-P "” across Pruneridge Avenue from the much larger H-P site. Jobs said Apple hoped to build an approximately 50-acre campus, for about 3,000 to 3,500 employees, in addition to its existing headquarters at One Infinite Loop.
"I think we found a way to stay in Cupertino, and, since we are your largest taxpayer, I thought you might be happy about that," Jobs said. "And we'll probably get larger still."
Indeed. Now, more than four years later, Apple has added another 90-plus acres to its land grab, buying the campus that H-P put up for sale this summer. Dowling declined to comment further on Apple's plans or timing. The only hint Jobs gave in 2006 of what Apple would eventually propose to the city was "to take down all the buildings and put up some more efficient structures, a campus basically, and build something nice."
H-P has until 2012 to completely move out. Its new CEO, Leo Apotheker, told investors on a conference call that the tech giant was aiming to consolidate its Cupertino campus into its Palo Alto, Calif., headquarters over the next two years.
When H-P first announced that it was selling Cupertino, an all-hands email in July described the campuses in Cupertino and Palo Alto as each just 60% utilized.
H-P purchased the core of its Cupertino land from Varian Associates, a scientific-instruments company that's now part of H-P spinoff Agilent Technologies Inc. /quotes/comstock/13*!a/quotes/nls/a (A 35.35, -0.30, -0.84%) . Cupertino is probably best known in H-P's history as the site of the company's fits and starts in computers, when it made its first moves to diversify beyond its core test and measurement business.
In the late 1960s, a group of engineers in Cupertino designed an early minicomputer prototype, rejected as too expensive by H-P management. When that so-called Omega project was canceled, a group of renegades, some of whom donned black armbands in mourning, secretly worked on their own time to resurrect their minicomputer in a scaled-back form, ultimately getting H-P into the computer business in 1972 with the HP 3000.
Back then, the site was also used for manufacturing and for semiconductor development, according to former H-P employees.
"When I joined H-P in 1979, I was a support engineer," said Homer Wong, who is on the board of an H-P and Agilent retiree club. "They were dipping boards," he said, referring to the manufacture of circuit boards. "They built the computers there. It was wild."
In more recent years, as manufacturing has moved to Asia and elsewhere, the campus has become home to a big executive briefing center and houses "knowledge workers." One unusual feature of the campus is a redwood grove, where H-P employees and retirees have picnics, and the historic Glendenning Barn, which H-P has maintained as a reminder of the property's pioneer-era life as an apricot orchard and farm.
While H-P has gone through gut-wrenching changes, cut and moved jobs elsewhere, and emerged as a slimmed-down giant with scars, Apple has transformed itself into a fast-growing consumer-electronics-industry leader, entering and creating new digital markets.
But the history the two companies is forever intertwined. And the middle-aged one might yet learn some lessons from the triumphs and travails of the patriarchs of Silicon Valley, maybe even among the ghosts of Cupertino.
Therese Poletti is a senior columnist for MarketWatch in San Francisco.
Therese Poletti chronicles the machinations of the technology industry for MarketWatch in the Tech Tales column. Before joining MarketWatch, Poletti covered some of the biggest companies in Silicon Valley for the San Jose Mercury News. Previously, she spent over a decade at Reuters, covering a range of beats, from spot news and Wall Street to biotech and technology. Poletti was also the lead reporter on teams at the Mercury News that won two Society of American Business Editors and Writers awards for breaking news and two Society of Professional Journalist awards. She was also a finalist for the Gerald Loeb Awards in the deadline writing category. Poletti is also the author of "Art Deco San Francisco: The Architecture of Timothy Pflueger," published by Princeton Architectural Press.
The U.S. economy seems to be unshackling itself from the housing market, but how long this can last remains unclear, writes Steve Goldstein.
11:38 a.m. Today11:38 a.m. Nov. 30, 2010
- Ulf | 9:47 a.m. Today9:47 a.m. Nov. 30, 2010
"Apple's buy of big H-P campus shows shift http://on.mktw.net/hUDVZr" 1:54 a.m. EST, Nov. 30, 2010 from tpoletti
"So far, it's a year to thank Silicon Valley http://on.mktw.net/f0kPPx" 12:14 a.m. EST, Nov. 25, 2010 from tpoletti
"Tech IPOs everywhere but Silicon Valley http://on.mktw.net/dE0u9C" 12:43 a.m. EST, Nov. 23, 2010 from tpoletti
"VC smackdown: Silicon Valley vs New York http://on.mktw.net/9kqn6b" 12:47 a.m. EST, Nov. 18, 2010 from tpoletti
"Should China's computing feat be feared? http://on.mktw.net/b611Ni" 12:11 a.m. EST, Nov. 16, 2010 from tpoletti
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