Defense department(DARPA), Xerox PARC, Stanford University, and UC Berkeley were all leaders in computer science.
Once something like this gets started, it keeps going without any planning... you can start a computer company elsewhere, but you'll spend all your time on planes trying to interview experienced engineers, or raise capital. Your employees will be at a disadvantage because the people they hang out with won't be connected to other tech firms in the area.
Steve Jobs, Bill Gates, et al are from this area. A whole bunch of those nerds started stuff in their garages way back when. With the amount of fellow geniuses churning out of the schools here (Stanford, UC Berkeley, etc.) it just exploded. Kicking myself for passing over the geeks in favor of the jocks in high school now!