HI. TECH
Working in paradise not the advantage high-tech advocates believe it to be

This is the fourth in a series of articles examining the main elements of the nebulous Hawai'i "technology industry" in a critical light. Are these elements based on fact or fancy? Can a viable economic sector be created from the sub-sectors deemed most important by business leaders?

By John Duchemin
Advertiser Staff Writer

•	Hawai'i technology on public radio Hear The Advertiser's John Duchemin and the latest Hawai'i technology-related news every Wednesday on Think Tech Hawai'i, 5 to 6 p.m. on Hawai'i Public Radio KIPO-FM 89.3, with hosts Jay Fidell, Laurie Akau, Don Mangiarelli and Gordon Bruce. TOMORROW: Think Tech features guest Hoala Greevy, of HoalaGreevy LLC, who makes a living with Linux; and Eric S. Raymond, a national expert on Linux. They will discuss "Linux in Hawai'i — Bad Day for the Empire?"

Software development, a versatile field that fuels every high-technology industry, remains a hopeful but small niche in Hawai'i. This casts doubt on a critical assumption of high-tech advocates: That Hawai'i will inevitably attract software developers who want a sub-tropical lifestyle.

This assumption has been repeated to the point of becoming economic development doctrine. Hawai'i, therefore, should be able to draw software firms and programmers who'd rather work here than Minneapolis or Fresno or Tokyo. Eventually, enough programmers will move here that they will mushroom into a "scene," and Hawai'i will have its very own software industry.

It's true that small software companies — and more than a handful — have been able to percolate along with reasonable success. Some, such as Web design platform maker Empowerosity or Nobscot, a two-person Kailua company that specializes in online human-resources software, have landed contracts with large local and Mainland companies. Others like HotU, Inovaware and AssistGuide have secured modest venture funding to help develop their software platforms.

A few off-island concerns have set up software shops here for quality-of-life reasons; San Francisco-based Internet platform designer 4Charity and wireless-phone video game maker Blue Lava are two.

And the occasional big company has been comfortable with basing a programming operation in Hawai'i to satisfy its developers' regional affections. The best example extant is Fidelity National Information Solutions, which bought local statistician Michael Sklarz's online real estate database platform, named him "chief valuation officer" and set him up as head of a research and development division in Honolulu with several dozen employees.

But Sklarz's company is possibly the largest software development employer in Hawai'i, and many of his workers are in subsidiary or customer-service jobs. No large-scale employers of computer programmers have significant operations here.

So what's holding back the alleged wave of eager software developers? Several factors have worked against Hawai'i. The most obvious is the collapse of the dot.com economy, which killed not one, not two, but three of the state's largest software developers: Square USA, WorldPoint and Ohana Foundation. Several hundred of the most talented programmers in Hawai'i lost their jobs as these companies' business models melted in 2001.

The difficulties go deeper than transient economic trends. Modern technology or no, it's still a courageous decision for a company to deposit an important software operation on these rocks thousands of miles from anywhere. It's still an undercapitalized place, with a minimal investment community that tends toward conservatism.

And wonderful lifestyle or no, it still takes a brave soul to accept a programming job here. Until the state becomes an authentic software center, programmers will fear for their careers — what happens if their company folds?

Throw in the worries about school quality — always mentioned by high-tech employers in describing employees' concerns over moving here — and Hawai'i suddenly doesn't seem like an unfettered paradise for a software developer.

Everywhere has trade-offs, but the state's technology advocates would be wise to note the words of Michael Capellas, the new WorldCom chief executive, who spoke to a University of Hawai'i audience a few years ago.

Modern technology, Capellas said, does level the playing field for a place like Hawai'i. But it also levels the playing field for everywhere else. And that means Hawai'i's quality-of-life advantage is likely to be fleeting at best.