Jeffrey Dale, president of the Ottawa Centre of Research and Innovation, summed it up succinctly in this week's edition of theOBJ:

"Nortel's a particular situation. It's not a bellwhether, whatsoever, for the rest of the Ottawa tech economy."

For the tens of thousands of technology workers laid off from the local operations of multinationals such as Nortel Networks Corp., that became painfully evident long ago.

Yet here we are, about four years after the telecom bubble burst. According to the latest figures from OCRI, 2004 was the year in which the local tech sector turned the corner. Employment is rising and the number of new startups continues to increase despite a very real and present risk of failure.

A couple of years ago it was assumed that many new startups began life in the home of a laid off telecom engineer who seeded the fledgling enterprise with severance pay. Yet, though most of those severance packages handed out by the multinationals must have run their course, the entrepreneurial spirit in Ottawa remains unquenchable.

For more established companies that weathered the downturn, 2004 also appears to have been a turnaround year. Astute readers of the OBJ and its website will have noted in recent months the number of privately held startups, companies usually tight-lipped about their fiscal performance, that have come forward to tout big revenue gains and customer wins in 2004. As we covered in the Jan. 17 edition of the OBJ, talk has once again turned to the city's next major IPO.

This growing optimism comes even as spectre of the downturn claims new victims as market demands continue to shift with new technologies. The impending demise of SiberCore Technologies illustrates that weathering the worst of a downturn by cutting costs and putting more emphasis on sales isn't always enough to survive.

The multinationals also continue to trim staff and reorganize. Thanks largely to Nortel, local employment levels among the big public firms dropped by more than one thousand in the latter half of 2004, Mr. Dale said.

Nonetheless, the nation's capital enjoyed a net gain in tech sector employment in the last six months of the year as smaller firms expand and the number of startups continues to grow.

As tech veteran Adam Chowaniec told the OBJ in its Jan. 3 issue, venture capital dollars in 2004, though not an impressive total, were invested more strategically in better quality investments. He emphasized the weeding out that has occurred over the past few years. "The business quality and depth of companies have improved dramatically," with a greater diversification into other technology industries beyond telecommunications, he said.

Inevitably, there remain local companies that will fail or cut staff in the months ahead. Thousands of laid off technology workers holding out for a return of the glory days of old will continue to struggle. Regardless of how promising matters appear now, it will still be years before tech employment approaches the level seen four years ago.

One can only speculate on the character of the local tech sector five or 10 years from now, but one thing is clear – "Silicon Valley North" will not be relying on a handful of titans in the same industry to drive its growth.