Keith Woolcock has charted every boom and bust of technology in both of his roles as a writer and technology analyst. In this column he reflects on how Britain has and will continue to differentiate itself from the Silicon Valley.
I was standing at the back of the room while a guy named Roger Foster talked about the prospects for his company, Apricot Computers. This is the mid to late 1980s, and I had just made begun work in the City as a tech analyst.
Back then, it seemed that all the important tech companies began with an A.
First there was Acorn, builders of the BBC Micro. By the time I arrived on the scene Acorn had crashed and burned. Then there was Amstrad and Apricot, both of whom made computers that were IBM compatible. In those days, Bill Gates would fly to the UK to personally attend Apricot product launches. I met him a few times. Whenever I asked him a question he looked as though he wanted to rip my head off.
Americans were different, you could tell that they thought the UK tech scene was full of pond life.
Someone else who had the same feeling was David Potter, the man standing next to me at that conference. Potter was the founder of Psion, the maker of the world’s first handheld computer. My firm had just floated Psion on the Stock Market. “ Do you think Apricot will make it?” I asked him. Potter shook his head:
British companies have to do something different. You need to create your own market, you can’t build me too products.
I don’t know if there are any rules to investing or building successful companies. But, while there might not be rules there are certainly patterns. What, for instance, do Disney, Apple, Microsoft, Coca Cola, Nestle, Nokia and LVMH, the French luxury giant, have in common?
To bring that list more up to date, I would add ASOS, which started by taking the fashion sense of Londoners and turned it into a global site for fashion. We could also add Sony, Gree and DeNA from Japan and Samsung and NC Soft from South Korea. Now I think about it, let’s put Rolls Royce, Aston Martin, BMW and Mercedes on the list too.
Play to your local strengths
It strikes me that many of the world’s most successful companies have found a way to take some national characteristic and parlay it into global dominance.
Britain, like Italy, has always been good at luxury cars. The deluxe life is also a strong tradition in France. Coca Cola and Disney have globalized aspects of American culture, as have the IT giants, such as Microsoft and Intel. Sony, Samsung, DeNa and Gree have globalized Asia’s fascination with gadgets and games.
As for Nestle, when one thinks of Switzerland a picture of chocolate, banks or watches tends to comes to mind.
Why were Nokia and Ericsson, at one time, the world’s most successful mobile companies? After all, like Nestle, the Swiss food giant, their home market was tiny. Furthermore, the two Scandinavians had not even invented the mobile, that plaudit must go to Motorola.
One reason is that because of geography mobile telephony was suited to Scandinavia. This early Scandinavian bias in favour of mobile was then given a significant boost when the European Union decided to back the GSM digital standard. At a stroke, a huge market appeared on Nokia and Ericsson’s doorstep.
Psion went where the Americans weren’t
Potter’s observation has stuck with me over the years. European companies, such as ARM, Imagination Technologies and Symbian, which had spun out from Psion, were locked out of the desktop market by US giants like Microsoft, Intel and nVidia, so they took Potter’s advice and looked for a place where American companies didn’t compete.
Nokia and Ericsson began to crumble the moment that the internet went mobile. When that happened, understanding the dynamics of internet became more important than having a grasp of mobile.
Over the last 15 or so years we have seen an unprecedented amount of creative destruction. Japan’s dominance of consumer electronics ended with the shift from analogue to digital components and the rise of the internet. Banking and the automotive industries have also seen a great deal of destruction and innovation and again, the internet and the rise of digital electronics is often a reason.
In 1970 half of all 16 year-olds in the US had a driving license; today less than 30% do. The motor industry is rebooting itself and trying to make its cars appeal to a younger generation that prefers to look at a smartphone than the road ahead.
Today about 8% of the economy is thought to be traded online. A study by McKinsey and the economist, W. Brian. Arthur, estimates that by around 2025 as much as 50% could be traded on line. One result of this is that up to 80% of the work currently done by humans will be automated – algorithms are eating the world.
How will UK based tech companies prosper in an Internet saturated economy, dominated by US and Asian giants?
Hardware revolution
My hunch is that the Internet of Things may provide one answer. A world populated with novel new devices on the factory floor, the office and the home, which are connected to the internet, will become an important new product cycle. Therefore, when I look at a company like Berg, I see real similarities with Psion. Both started in software but ended by making real things. That, I’m sure is the future.
Keith Woolcock is a technology analyst at 5th Column Ideas, has written for Time Magazine, The Mail on Sunday, and is currently working on Automatic World, his latest book.