In his final address to the ICL Users Group, the then head of ICL UK cast aside the customary protocol and spoke of his antipathy towards IBM: I hate them, he said. By Andy Lawrence The sentiment was nationalistic: IBM was taking vast tranches of business away from ICL and doing so with apparently inferior […]
In his final address to the ICL Users Group, the then head of ICL UK cast aside the customary protocol and spoke of his antipathy towards IBM: I hate them, he said.
By Andy Lawrence
The sentiment was nationalistic: IBM was taking vast tranches of business away from ICL and doing so with apparently inferior technology and the antipathy of the UK government. In mid-1990, ICL was sold to Fujitsu, a successful competitor against IBM. Once again, nationalist feeling came to the fore: Hans Olaf Henkel, the then head of IBM Germany spoke of ICL as ‘Fujitsu’s Trojan Horse’. Shortly after, ICL was excluded from three European research programs, it was classed as Japanese. At the same meetings the inclusion of IBM in the programs was affirmed.
In the fractious history of the European computer industry, such episodes are common enough, just as in the US. But Europe differs from the US in two main respects: first, government policy has, at least traditionally, played an important role in almost every aspect of the European’s industry’s development; and second, nationalism, in terms of supporting national champions, has always been a strong, influence shaping interventionist policy. In Trojan Horses and National Champions, The Crisis in Europe’s Computing and Telecommunications Industry, Paul Gannon chronicles how the various strategies were played out, mainly in years up to 1995. It was a period of spectacular decline It ended with ICL barely profitable and in the hands of Fujitsu; Philips out of the business altogether; Bull of France in financial trouble but nevertheless being prepared for privatization by the French Government; and Olivetti of Italy in a decline which would later lead to its break-up. While Siemens-Nixdorf of Germany seems to be moderately profitable and owns Pyramid of the US – which is largely being supported by its patient German parent. Gannon’s analysis of what went wrong in Europe is detailed but ultimately inconclusive. He is insistent that the most obvious view – that government cannot and should not run computer companies or interfere in the computer market – is too simplistic. Both the US and Japanese Governments, he points out, were interventionist, guiding research and development and favoring national champions with huge research projects and government contracts. But in both cases, such ‘distortions’ of the free market seemed to help the prospects of the companies. Gannon appears to believe that a large part of the blame for Europe’s troubles must lie with the way the governments intervened. This leads the author into some detailed explanations of the role and actions of the European Commission (and other bodies). In spite of the importance and space Gannon attributes to it, it is not clear that the role of government in Europe really deserves this attention, since its role in shaping the European IT industry seems to be negligible. The Commission, which in any case has far more limited budgets and powers than the US Federal Government, has so far proved itself to be an often divided and bureaucratic organization. Few of the research projects it has backed have come to much or are likely to. If not with the government, then, where are we to look for Europe’s problems? In many respects, Gannon’s book, extensive and well researched as it is, has become dated even as it is published. The EC’s support for massively parallel processors is an example. Europe may have the technology, but the market has shifted to become more US centric. With an acute understanding of the importance of global economics, European corporate customers generally won’t risk buying technology that is not winning acceptance in North America. The focus of the EC’s policy has also changed. Both it and its constituent governments are far less concerned with providing financial support or protection to suppliers. Certainly, many policy makers now tend to adopt the simplistic view that Gannon himself is reluctant to wholly embrace. The corollary of this in terms of research, development and standardization is the now widely held belief that the market will almost always outpace anything in the government funded laboratories. The fate of the national champions, too, has also become far less of an issue than it was even three or four years ago.
Dealing with change
Indeed, it is now clear that the fact of being European was only part of the problem faced by the big suppliers. The real difference between the US and Europe is perhaps not how older companies deal with change, but why the US Government has been so much more effective in regenerating its computer industry with new companies. The answers here may lie in an examination of world software leaders, or perhaps in the role of venture. Unfortunately, these developments scarcely merit a mention in the book. In summary, the book is a well researched account of the recent past of the European computer industry, which may well prove to be an invaluable history book. But it lacks conclusive analysis As such, its relevance is much more limited than it could be.