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Many challengers for Silicon Valley's high-tech crown

Silicon Valley has long been synonymous with the high-tech revolution, dating back to 1938, when Bill Hewlett and Dave Packard started what would become Hewlett-Packard (HPQ) in a garage. Today, such companies as Google (GOOG), Apple (AAPL) and Facebook (FB) call it home.

But will the next generation of tech giants come from the Valley? Maybe not. Fierce competition has been growing elsewhere in the country, and in the world, even as Silicon Valley's past successes make it harder for up-and-comers to ply their trade in the area.

The complete association of high tech with the fertile entrepreneurial section of Northern California is actually unfair. The greater Seattle area gave birth to many companies, including Microsoft (MSFT) and Amazon (AMZN). Dell and Texas Instruments (TXN) are in Texas. Boston was a hotbed of computer activity before the PC and today is the home of TripAdvisor (TRIP) and hosting giant Akamai (AKAM).

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In all areas these and others -- the Research Triangle of North Carolina, Silicon Alley in New York City, Chicago's Golden Corridor and the Denver Tech Center in Colorado -- startups are exploring new markets and reinventing how people live and do business. There's a long list of more than two dozen metro areas with a high density of high-tech entrepreneurship.

Extensive tech development is also happening across the globe. Ever use the popular crowdsourced navigation app Waze? It was developed in Israel. Angry Birds is a product of Finnish company Rovio.

Even many U.S. companies were founded by people from other countries. According to a Kauffman Foundation analysis, about 28 percent of software companies, 32 percent of computer or communication companies and 35 percent of semiconductor makers in the U.S. were started by immigrants.

However, the position of the U.S. and, specifically, of Silicon Valley, as the must-be place for tech entrepreneurs, while still strong, has been taking some hits. Some of the top-ranked non-U.S. locations include Tel Aviv, London, Berlin, Singapore, Paris, Sao Paulo, Moscow, Bangalore, Sydney and Toronto.

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Silicon Valley has enjoyed numerous advantages, including concentrations of investment capital and universities and large tech corporations that have become breeding grounds for entrepreneurs. But demand for the area has driven up the cost of doing business, the cost of living and, as a result, the cost of talent.

The more it costs to start a business, the more investment a company needs -- and the bigger a payoff it must eventually provide. It becomes easier not just to do business, but to make money as an investor if you don't need a company to be valued in the multiple billions to get a return on your investment.

Furthermore, the success and focus in Silicon Valley leads to some unique shortcomings. The very bright people involved in the industry can assume that everyone shares their interests, needs or resources. The vast majority of the world's population lives outside the U.S., in places far removed from Silicon Valley.

Until the Valley's entrepreneurs and their backers come to understand that they don't represent the mass market, they run the risk of having people closer to real users pull away the business, attention and dominance over time.

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