The reason we have such a huge choice of low cost computers and all sorts of gizmos and gadgets, smart phones, and electronic toys is because of the amazing advances in chip designs. Hundreds of small chip design firms are producing incredibly advanced semiconductors that power a slew of innovative devices.

But the reason we have so much innovation in the chip industry is because of a manufacturing revolution that began more than twenty years ago. In 1987, Taiwan Semiconductor Manufacturing Company (TSMC) was founded as a new type of chip company--it was a semiconductor foundry--it made chips for other companies.

This completely transformed the chip industry and ushered in an innovation explosion. Chip designers didn't have to build their own chip factories, they could buy production time from chip foundries. Previously, chip startups had to raise hundreds of millions of dollars, primarily to pay for chip production--yet their value was in the designs.

Chip foundries led to a dramatic cut in the cost of establishing a chip company. Investment now went into chip design, not building a manufacturing line and learning how to run it.

This simple manufacturing revolution is responsible for all the innovation in electronics. And that's a model that could be effectively applied in the automotive world, and unleash a wave of innovation.

Manufacturing expertise . . .

I support a bailout of the automakers for one key reason: manufacturing expertise. If they shut down then we lose many decades of manufacturing knowledge and processes--it would be hugely expensive to recreate.

That manufacturing expertise can be used to build a Hummer, or it can be used to build hybrids, electric cars, and anything with wheels and an engine.

There is a tremendous amount of innovation in transportation that could be unlocked if you didn't have to have build your own factory to make the vehicles.

General Motors and the other car makers know how to re-tool lines to make all sorts of vehicles. They know what designs, and components work, and what doesn't; they have relationships with parts manufacturers, they have software design systems, test systems, air tunnels, algorithms...

They also know how to get through the red tape of qualifying vehicles for US roads. There is a massive amount of knowledge and expertise within the Big 3 that could be applied to producing the greenest of green vehicles.

My proposal is to use government monies to convert the Big 3 auto makers into car making foundries, in a similar fashion to chip-making foundries. That way, small startups with great ideas could quickly get their designs into production without requiring massive amounts of capital and learning how to build and operate a car factory.

Tesla Motors . . .

Take a look at Tesla Motors, one of the most innovative car companies of the past decade. The Tesla Roadster is an innovative all-electric sports car made with a carbon fiber body that has a range of 244 miles and does zero to sixty in less than 4 seconds. It received Time Magazine's 2nd best inventions of 2008.

But you have to very rich to buy one of these $109,000 cars primarily because building a manufacturing line is so expensive. It also means that Tesla had to raise massive amounts of capital to fund the manufacturing lines. This means the innovative Tesla technology will take years to trickle down to mainstream models--yet that's where it's lower carbon-footprint would have the most value.

Tesla ran into lots of delays because of manufacturing problems, and also problems with some of the components.

What if Tesla contracted with GM to make its cars? GM would know how to quickly tool up a production run, it probably would be able to help out with some of the drive-train problems Tesla had. GM would know what things work and how to avoid many problems that Tesla had to learn the hard way..

It is this kind of manufacturing expertise that could be leverage across a new industry. Small startups with great designs and technologies could quickly come to market without having to build their own production lines.

Car foundries could set off a huge wave of innovation at precisely the right time when we are searching for more responsible and sustainable forms of transport. And the US could grab a leadership position with such a plan.

Let's turn the Big 3 auto makers into foundries that can create a platform for a new type of innovative auto industry.

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A few months ago Sequoia Capital doused the ever ebullient Silicon Valley with a bucket of ice cold reality when it laid “good times” to rest. Today, one of Sequoia’s all time stars laid a big wreath on that grave in the pages of The Wall Street Journal. Google. And while it didn’t implicitly state that it might face tough times next year, comments by its CEO amount to a proverbial bear call which could mean bad news now only for Google but also for rest of the media and advertising sector.

“We have to behave as though we don’t know what’s going to happen,” Google Chief Executive Eric Schmidt told the Wall Street Journal. It seems like a prudent move. But I see it as a big red flag and I think Schmidt is preparing us for what could be a terrible 2009. The WSJ says that Google executives have been preparing for slower growth for a year but “the economic crisis is forcing them to step up their efforts.”

According to conventional wisdom (and investors) Google is the best positioned company to survive and perhaps thrive in the current advertising slump. If the leader of the pack is feigning ignorance about its chances, what can one say about mere mortals.

I find it hard to believe that a company that keeps world famous economist like Hal Varian (who muses on economy and Google’s prospects often on the investor calls), doesn’t know. As a company Google collects enough data on a daily basis that it can take a fair pulse of the broader economy. Remember, they could accurately track the spread of flu across America just based on searches, so why can’t the track the economic-sentiment? Additionally it sells ads to everyone from mom-and-pop shops to consumer durable giants and it has a fair idea on the degree of tightness people are holding their billfolds. They have enough intellectual horsepower on campus to put two-and-two together.

Beyond Schmidt’s statement, one has to look at their other moves such as plans to slash 10,000 or so of their contractors, slowing cap-ex investments and killing off projects. These point to tough times for the company that has lived a lush life so far.

Projects that are too pie-in-the-sky are going to be killed. Schmidt calls it the “dark matter.” Google Lively and Google SearchMash are two of the many projects, which will soon not matter. Google is contemplating killing of Google Notebook and Google Audio Indexing as well. Google Page Creator has given way to Google Sites. In that vein, Google is going to prune overlapping products. No more the 20-percent time for pet projects for engineers, though it might come back once the economic wheel churns. These are smart and prudent moves even if they are prompted by desperate need to control costs and meet their numbers.

I know it might sound hokey but rich don’t stop driving their Aston Martins just because the price of gas is going up. They do so when they are not as rich! The same analogy holds for Google and its cost cutting efforts. Just remember how much of PR they milked out of their 20-percent philosophy. They are essentially eating a cow-pie on that. They wouldn’t be doing this unless things are really really and REALLY tough.

Google needs to keep its sales machine going at a time when it is facing the same malaise as that of broader market – slowing spending on marketing and advertising. There is some argument that Google is going to win because of their performance-based advertising system.

While that is true to some extent but what happens when the economy goes into a deep freeze? If you don’t have money to splurge on a large screen Plasma TV, there is little chance you are going to search for that, and fewer the opportunities for Google to sell more ads against those searches. Of course, if there is no intent to buy amongst the searchers, then there is less inclination to click on those ads as well. And that is not good news for Google.

Google, of course is going to try and meet its targets by taking more out of the pocket of its “adsense” partners and undercutting competitors. WSJ points out that the company is focusing heavily on display, mobile and other ad-opportunities, which can only mean bad news for their rivals.

Related: Why Silicon Valley Should be Worried

You may remember Sanjiv Jivan as the GWT-Ext developer that changed over the debacle. He then went on to start work on a GWT version of SmartClient libraries and has now released SmartGWT 1.0.

It is a tour de force of not only a huge widget library, but he explains how it is much more:

So what’s so smart about SmartGWT? Let me try to explain. SmartGWT is not just another Widget library. While most Ajax frameworks focus primarily on presentation and displaying mostly read-only data, either local or via XML / JSON, SmartClient was built with server side integration in mind. Most enterprise applications are not just about about data presentation, but about being able to propagate data changes made by the user to the backend. So while its tempting to use library X that has a cool tree widget, it’s not until you actually try to use it your application that you encounter the real world hard problems. For example, how do you take data from your business objects on the server to not only display in a tree widget, but also be able to update your data model when, say, the user reorders the tree nodes or make edits / deletes in the UI. How do you display hierarchical data where nodes may have hundreds of children? And so on..

Most Ajax frameworks stop short and leave it up to the user to manage state on the client side and propagating the changes to the server. This is not a trivial problem! Over the past few years UI widget libraries have improved significantly and there are now various options available to users. Simply put, having good looking widgets is not the hard problem today. In addition to having good looking widgets, having end-to-end integration of the UI components with the backend is the hard problem. It’s this 20% of the functionality that takes 80% of the time in building most enterprise applications.

The showcase will give you a good feel for what is out there, and it contains some interesting items including:

• Miller Columns: The ColumnTree provides an alternate navigation paradigm for Tree data, sometimes called “Miller Columns” and seen in iTunes
• Nested Grid: A convenient way to display 1-n relationships
• Printable Views: SmartGWT supports printable views of its components.
• Advanced Filter Builder: a databound filter builder.
• Tile View: Representation of data as “tiles”. Again, TileGrid supports data binding so sort / filter and edits can be easily performed.
• Calendars : A Google Calendar like widget that supports databinding so edits and drag drop changes can easily be propgated to the server for persisting.
• TreeGrid : Supports multiple columns, editing, column locking, lazy loading and more.
• Live Grid / Tree: Grid / Tree virtual scrolling or live grid

Really amazing work. Sanjiv recently had a Q&A session with InfoQ where he talks about the approach taken in developing SmartGWT and the his thoughts on the differences between SmartClient and Ext.

David Recordon / O'Reilly Radar:
Getting OpenID Into the Browser  —  Google Chrome did a smart thing: Less.  They unified the search box and address bar, since that's what people do anyway.  That gives us back precious pixels for the only thing that's as important to an average web user as where they're going: Who they are.