What makes a high-tech hotspot?

Feature

What makes a high-tech hotspot?

Silicon Valley isn't the only hotbed for e-business. There's Silicon Alley, Silicon Fen, Silicon Wadi and Silicon Glen, too. Danny Bradbury spins the globe and finds the elements necessary for technological start-ups

We may live in a global village, but national differences in IT policy and e-business expertise still put some countries closer to the centre of the high-tech map than others.

This year Sweden topped the Information Society Index - an evaluation of IT readiness within 55 countries carried out by IDC and the World Times ( www.world paper.com/) - and Intel chief executive Craig Barrett urged Taiwan to leave low-end manufacturing to China and concentrate on more profitable research and design activities. Many countries want to emulate the successes of the US' Silicon Valley because e-business and IT in general are such huge boosts to local economies, but some are more successful than others.

There are many reasons for such successes, but one of the most important is strong academic support. Silicon Valley would never have existed unless Stanford University was based there. The Massachusetts Institute of Technology has delivered the same advantage to the New England state. On this side of the pond, a similar situation has arisen in Cambridgeshire.

Charles Cotton is managing director of Virata, a manufacturer of components and software for DSL equipment suppliers, which has just opened its Cambridge office. Cotton works with Virata founder Hermann Hauser, who also founded Acorn Computer, one of the seminal UK computer companies, which is also based in Cambridge.

"There is a fusion between university and research - an increasingly outward-looking group of people within the research establishments who recognise their potential in the business world," says Cotton.

Other countries become involved in particular technologies for historical reasons - Nokia, for example, became entrenched in cellular communications after developing prototype radio-telephone equipment for the Finnish army in the 1960s, according to spokesperson Riitta Mard. Given the company's experience in this area, it is not surprising that it went on to commercialise mobile communications and e-business technologies and build on its successes.

Steve Barrett, UK managing director of Israeli firewall specialist Checkpoint, says the link between military projects and exportable technology is even more significant in Israel, where the focus is on telecommunications and security. "A lot of people get their experience of programming from the military, because they go quite young," he explains, adding that this is accentuated by the regular periods of military service imposed by the government. "They're pragmatic in that if you're an accountant they give you something to audit. If you're a programmer they give you something to program."

State support, then, can yield high-tech rewards, and nowhere is this clearer than in Malaysia, where the government has initiated a long- term programme designed to turn the country into a technology hub by 2020. By installing a high-speed data communication corridor and relaxing corporate laws, the government hopes to bring a welcome boost to its economy. It has even built a new administrative capital that is sited within the Multimedia Super Corridor zone.

Such initiatives rely heavily on private public partnerships, of course, and according to Bob Carter, systems director for group research and development at financial networking company De La Rue Interclear, the tax breaks for participating companies are astounding. "All I can say is that the people that are running the Multimedia Super Corridor are bullish and seem to get on with murder compared to other things in Malaysia," says Carter, who has consulted on regional technology development in Asian countries including Singapore.

Companies within the Multimedia Super Corridor will face no restrictions on employment, and will be exempt from local ownership requirements.

While high-tech companies are happy with government intervention as long as it creates liberal trading conditions for inward investment, they are not so happy when taxes prevent them from achieving what they see as their destiny. Walter Herriot, managing director of St John's Innovation Centre, a Cambridge-based incubation centre for high-tech companies, argues that the Cambridge region is generating more tax revenue than it is allowed to use, because these revenues tend to be deployed nationally.

"Because there isn't a local taxation system in the UK, we don't think we get our share of the revenue back," he says, lamenting a poor local infrastructure and high house prices.

As you can see from this atlas of innovation, there are strong pockets of e-business and IT activity across the globe. What is interesting is that in the IDC/World Times Information Society Index, the US fell to the number four spot from second place last year, let down largely by a limited Internet infrastructure. Clearly, the place where the computer revolution really took off still has some lessons to learn.

Silicon Glen
Scotland has maintained an aggressive inward-investment stance since the 1970s, attracting technology companies to its shores. The government has created a haven for personal computer manufacturers and mobile telephone manufacturers. In 1999, exports of PCs were £7,184m, constituting the largest manufacturing export in Scotland. Electronics overall made up 57% of Scottish exports that year, and Silicon Glen produces 28% of Europe's PCs. A flagship for the Scottish IT sector is the Alba Centre at Livingston, a Scottish Enterprise initiative that focuses on nurturing system level integration (microelectronics design) companies.

www.albacentre.com/

Isle of Man
BT made its first live video call over a test 3G network on the Isle of Man in June.

Cambridge, UK
Cambridge produced groundbreaking companies such as Acorn, Sinclair Research and Advanced Research Machines. According to the Cambridge Gateway Fund, there are 1,650 companies employing 45,000 people in Cambridge. Then there are research facilities from such notable companies as Microsoft.

There is talk of an innovation corridor opening up to the north-east towards Norwich. Major technologies include telecommunications, microprocessor design and biosciences.

www.cambridge enterprise.co.uk/

Ireland
Long known for tempting US IT firms with tax breaks, Ireland is now bolstering its IT economy with the help of e-business infrastructure developments and government funding. The Global Link Crossing is a fibre link between Dublin and key European sites, which is being hooked up with broadband links in Dublin and the outlying areas. The country is investing I£1,590bn (£1,260bn) in research and development. I£560m of that will go into IT and biotech research in the form of a Technology Foresight Fund, and will be administered by Science Foundation Ireland. The first awards under this scheme were announced at the end of July.

www.sfi.ie/

Massachusetts, USA
The Massachusetts Institute of Technology (MIT) has produced some important technical alumni. Open source guru Richard Stallman, for example, came from there. MIT has contributed many of today's commercial information technologies including the Internet, RSA encryption, and Ethernet networking. Massachusetts is known for its rivalry with Silicon Valley, possibly due to the fact that they both have strong academic links.

www.mit.edu/

New York, USA
Unlike the other two technology powerhouses in the US, New York's burgeoning high-tech economy comes from strong business roots rather than an academic background. Housing the Nasdaq high-tech stock exchange, New York has applied its aggressive business culture to the e-business world, becoming known as Silicon Alley. Throughout the dotcom boom of the mid- to late-1990s, the south-central Flatiron district of NYC served as the incubator for the majority of IT players.

Silicon Valley, USA
Silicon Valley is, of course, the granddaddy of all regional IT economies. Radiating out from Stanford University, it was originally formed in the 1930s when two students there formed Hewlett-Packard. Since then, the notional region has expanded to cover a larger area south of San Francisco, including San Mateo, Freemont and San Jose. The region is currently struggling with power shortages that have caused concern among IT business leaders.

www.siliconvalley-usa.com

Ontario, Canada
Ottawa's economic development board estimates that IT sales were worth C$17bn (£7.5bn) last year, and 90% of it was exported. Strong technologies are optics and telecommunications, and big companies include Corel and Nortel Networks.

Scandinavia
With companies including Nokia and Ericsson, the Scandinavian region is known for its emphasis on mobile telecommunications, stemming from work done on radio telephony in the 1960s. In Finland, the value of electronics products produced in 1999 was FM100bn (£10bn) in 1999, and the value of telecommunications equipment produced in the country grew 35% in that year. Mobile phone penetration reached more than 70% in the country during 2000, and the number of mobile phones surpassed the number of landlines in 1999. Having revamped its Information Society Strategy in 1998, the country has embarked on several initiatives including an electronic ID card, launched the following year. Finland's national R&D spend has grown for 1.5% in 1985 to more than 3%. Sweden's went from 2.7% to 4% in the same period.

http://www.investinfinland.fi

India
India made a name for itself in the e-business sector by outsourcing a well-educated programmer workforce to help solve year 2000 issues for western companies. Figures from the Ministry of IT (set up in 1999) suggest that software and services and electronics exports in IT grew 30% to $5.58bn in 1999-2000. The country wants $50bn in software exports by 2008, and hopes to accomplish it through free trade zones providing favourable conditions for foreign IT firms.

www.mit.gov.in/

Israel
Israel is known for its work in the telecommunications and security sector, fuelled largely by its strong emphasis on technology development in the military. The Israeli government says that high-tech products account for 70% of exports, while there are some 80 high-tech Israeli companies trading in the states. Research and developement soaks up 2.2% of the country's gross domestic product.

www.mfa.gov.il

Dubai
Last year, Dubai opened its Dubai Internet City, built for £490m, as a free trade zone for foreign IT companies. It currently houses more than 200 companies including Microsoft, Oracle and Hewlett-Packard, with more pending. The site includes a broadband Internet infrastructure facilitating an Internet telephony system. The government has greased the wheels for foreign investors (who are allowed to own 100% of any resident company) by putting in place a 24-hour visa service and fast-track immigration process for IT workers.

www.dubaiinternetcity.com/

Malaysia
Malaysia's Vision2020 initiative is an economic development programme designed to modernise the country, turning it into a petri-dish for high-tech economic development. To support the scheme, the country engineered the Multimedia Super Corridor, a 15km-wide, 50km-long stretch of development territory containing high-speed communications links designed to attract companies to the region. The area will also play host to two new cyber cities - Cyberjaya and Putrajaya - which will be linked to other cyber cities in the future.

www.mdc.com.my/

Singapore
S&T 2005 - Singapore's government-sponsored IT initiative - has committed $7bn to bolstering R&D. It set up two organisations - the Biomedical Research Council and the Science and Engineering Research Council - to administer funds. The country hopes to be one of Asia's two top hubs for data communications, and this year it finishes laying a high-capacity fibre-optic cable to India. It also has an internal broadband system, Singapore ONE, to serve the population.

www.nstb.gov.sg/

Japan
Japan, known for its production of high-tech gadgets and consumer devices for the past 30 years, has been suffering from a flat economy, but that hasn't stopped it from taking the 3G market by the horns. The Japanese are expected to be the first to roll out commercially-available 3G services this autumn. The secret behind Japan's success is NTT DoCoMo, the fabulously successful mobile data company, that took a 16% stake in US-based AT&T Wireless late last year.

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This was first published in November 2001

 

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