The industry's rapid growth has also been a boon for the communities in which they are located, since these companies, once they hit the Big Time, provide well above average salaries along with a large capital investment in property and equipment.

One of the hottest companies right now is America Online, whose bid to acquire Netscape takes an already formidable Internet company and positions it to be one of the leaders of the New Economy.

In March of this year America Online announced its intention to expand its physical presence in Northern Virginia by selecting Prince William County as the site for a new $520 million technology center. The company also announced plans to construct two new buildings worth $80 million at its nearby headquarters in Loudoun County, near Dulles Airport.

"We're very excited about expanding our investment in Northern Virginia through this new tech center in Prince William County, as well as through the additional investments we're making on our Dulles campus," America Online Chairman and CEO Steve Case said.

America Online is purchasing approximately 25 acres of land in the Battlefield Business Park in Prince William County for the construction of the 220,000 square foot technology center, with the option to purchase additional adjoining land. The company expects to hire 175 new employees -- 125 on-site and up to 50 more in support roles at other Virginia facilities -- to staff the new tech center.

The new facility will join America Online's existing technology centers in Reston and Dulles, Va., and will offer expansion space for the computer systems that support AOL's family of brands. The company plans to install $400 million in programmable computer equipment and peripherals in the new technology center.

America Online's two new buildings near Dulles will total 400,000 square feet and will house 1,200 additional employees.

To date, the company has invested -- and announced plans for future investments -- totaling more than $1.3 billion in Virginia, and has hired more than 3,100 local employees. It recently completed work on the fourth building at its Dulles headquarters, which will house 650 employees.

As part of the deal, the state will provide a $500,000 grant from the Governor's Opportunity Fund to assist Prince William County with site preparation. In addition, Prince William County will supply $500,000 in grants, while the state's Department of Business Assistance will provide work force training services to the company.

New York's Pre-Approved Sites
Virginia is not the only state to aggressively pursue computer companies.

As the longtime home to IBM, New York is no stranger to the computer industry. However, much of the industry's recent expansion seemed to be taking place outside of the Empire State. Last year New York launched a program it calls the Semiconductor Manufacturing Initiative-New York (semi-NY), hoping to make the state a hub for semiconductor industry growth.

Last year the state announced that 13 sites had been selected by Industrial Design Corp., a consultant hired to provide a professional evaluation of potential sites, as the best suited for semiconductor development.

"By identifying these sites now and getting them pre-approved, we will be able to offer the semiconductor industry ready-to-go, shovels-in-the-ground locations," said Gov. George Pataki. "In this rapidly changing industry, these sites will give the industry an extra edge so they can stay a step ahead of their competition around the world."

The Chip Fab '98 program came on the heels of IBM's decision to build the world's most advanced computer chip development facility near its headquarters in East Fishkill. The $700 million facility will manufacture the next generation of 12-inch (300mm) diameter semiconductor chips. The first chips are scheduled for production in late 1999.

IBM's decision to build its new facility in New York is testament to just how far the state has come in the past few years in changing its business climate and reputation.

Birds of a Feather Flock Together
Much like the automobile industry nearly a century before, companies in the computer industry have a tendency to cluster together.

In the beginning, it was proximity to brainpower -- major research universities -- that drew these companies together. On the West Coast there was Silicon Valley and on the East Coast was Boston's Route 128 Corridor. Other clusters began forming around Ann Arbor, Austin and Chapel Hill.

As these clusters began to form, the cost of living -- not to mention the cost of doing business -- began to rise, opening the door for less expensive locations to piggyback off the magnetic pull of places like Silicon Valley and Route 128. In fact, New Hampshire's ability to nurture and attract high-tech companies is probably directly related to its proximity to Boston, as well as to its low cost of living.

This factor caused computer industry executives to expand their location possibilities beyond the cream of America's engineering universities.

Brainpower was still important -- in fact, it's essential -- but industry executives soon realized that brainpower could be imported, if the location had "star power." In other words, if the location offers an excellent quality of life -- be it cost of living, recreational activities, cultural opportunities, tranquility, or whatever -- the hotshots from Cal Tech and Stanford and MIT would be more than willing to pack up and move.

And they were right. Skilled labor was indeed mobile. And for companies like theirs that recruited top talent nationwide, not being in a location perceived to be "hip or cool" put them at a disadvantage with their competitors. One by one, companies like Gateway have moved on to places like San Diego.

Pretty soon computer industry clusters began forming in the Rockies, as high-tech companies began moving to Utah and Idaho and Colorado and even New Mexico. Skiing in the winter, hiking in the summer, blue skies, clean air, less traffic and congestion, lower living expenses -- all of these things became important recruiting tools.

Other clusters are being formed as we speak and, while not all of them can offer the Rockies, all have a widely perceived high quality of living. The Northern Virginia region, from Richmond to the Washington, D.C., suburbs, has become a hotbed of computer activity, attracting three semiconductor manufacturing facilities over the past several years.

Even Orlando, Fla., home of Mickey and Minnie, is getting a piece of the action. Cirent Semiconductor, which currently has 1 million square feet of manufacturing space and employs nearly 1,700 people in Orlando, has announced plans for another $700 million expansion over the next three years.

This emphasis on quality of life also excluded much of the United States from even the remote possibility of being seriously considered for these high-end jobs.

Market Forces Still Exert an Influence
But it's also companies like Gateway that offer the greatest opportunity for communities not inhabited by the Beautiful People. That's because, as important as quality of life is to recruiting top talent, market forces still come into play in most location decisions.

Consequently, companies like Gateway have established facilities throughout the United States. Computer assembly plants, technical assistance facilities, order processing centers -- these types of facilities, so common among the traditional manufacturing companies, are also important to the industry's ability to move its product from the assembly line to the consumer's desk. Computer makers like Dell and Compaq are no different.

For that part of the computer industry that manufactures and ships product, traditional factors such as productivity, work ethic, transportation access, taxes, and labor costs all play a major role in the site location decision-making process.

For these companies, there is no real magic that separates them from the rest of the economy. Granted, they're not all looking to build $2 billion facilities, like the wafer fabrication chip manufacturers are.

And obviously there are certain requirements within the computer industry that make their location needs different from, say, a food processing plant -- the roughly 1 million gallons of water that a silicon chip plant requires daily is certainly one thing that comes to mind. But when it comes to manufacturing, assembling, shipping and selling their products, their needs are remarkably similar.

That's good news for the thousands of communities throughout the United States trying to grasp onto a piece of the New Economy. As it gets bigger, the cyber-industry will physically expand into newer regions and will follow the same laws and logic that market capitalism always has.

The same goes for its site location considerations, too.

Bill King is the editor of Expansion Management Magazine.