A good article about why increased Pentagon "war against terrorism" spending may hurt Silicon Valley. While any increased spending is likely to include some high tech spending - which in some way or another will filter down to Silicon Valley, working with government can be dangerous for a company's long term health. The main problem seems to be the notorious inefficiencies found in government contracts. Secretive single source deals are ripe for companies to overcharge and underdeliver. The article talks about how the end of the Cold War hurt a number of companies that had previously ditched their "civilian" business to focus on huge government contracts. It's really a diversification problem. If you start supplying government contracts you tend to focus on only government contracts, and then if you lose that customer, you lose a lot.
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