The magic doesn't happen when nobody has met each other and communication is limited to telephone, email, and IM."
Someone should tell the Linux Kernel (and other Open Source dev, where a lot of terrific "as magic as it can get" sw dev happens) guys.
No, I am not saying that OS dev is the same as commercial dev, or even that what you are saying is essentially wrong.
I am just challenging the absolute nature of "The magic doesn't happen when nobody has met each other and communication is limited to telephone, email, and IM." Plenty of "magic" does happen every day when people who know each other only by their irc handles or email ids work together on a codebase.
Whether such activity can be harnessed to help a commercial dev effort is certainly debatable (and there are many good points on either side of the issuel), but the idea of confining "magic" in software dev to only dev teams working in the same room is somewhat dubious (imho, ymmv etc).
That said, time to party here in Bangalore. Happy New Year, everyone!