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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: baddtiming who wrote (65922)	1/23/2000 10:40:00 PM
From: puborectalis	Read Replies (3) \| Respond to of 108040

Europeans alarmed of falling behind U.S. in the technology About 50 percent of U.S. homes are hooked up to the Internet; only 12 percent are in Europe. BY WILLIAM DROZDIAK Washington Post BERLIN -- ACROSS a continent that sees itself as the cradle of Western science and civilization, many political and business leaders have reached the alarming conclusion that Europe is rapidly losing ground to the United States in the growth industries of the future. Just as the NATO bombing campaign in Kosovo revealed a huge disparity in military capabilities between the Old World and the New, the merger between America Online and Time Warner has raised fears among Europeans that the United States is surging ahead in locking up an enormous commercial bonanza through future control of the Internet and other technologies. While Europe has scored notable success with its mobile telephones, many leaders now acknowledge that a basic policy failure of the past decade -- subsidizing dying industries in an effort to preserve jobs -- has contributed to the overwhelming U.S. superiority in such booming sectors as computers, Internet services, biotechnology and even investment banking. ''In Europe we are being left behind, for we have not been capable of reproducing the successes achieved on the other side of the Atlantic in the 1990s,'' Spanish Prime Minister Jose Maria Aznar said at a meeting of European officials in Madrid aimed at stimulating growth of the high-tech sector. ''Our problem is not the lack of a scientific or technical base. It is the lack of stimulus for business initiatives, which is key to North America's success.'' What astounds many Europeans is the sheer scale of the AOL-Time Warner merger: The combined value of both companies represents about 30 percent of Spain's gross national product. ''This is the kind of bold and ambitious way of doing things we need in Europe,'' said Spanish Industry Minister Josep Pique. Given that technological advances tend to produce rapid innovation, the wide, popular access of computers and the Internet in the United States is expected to accelerate American predominance for years to come. About 50 percent of U.S. homes are hooked up to the Internet while only 12 percent of families among the 15 nations of the European Union have similar access. Similarly, Europe lags well behind in the use of the Web for online shopping. Last year, according to the European Union, revenue from electronic commerce among the 15 EU nations grew substantially, to $18 billion, but still amounted to only about one-third of similar income generated in the United States. ''We need a wake-up and a shake-up at the European level,'' Erkki Liikanen, the European Union's commissioner who oversees information technology, said at the Madrid meeting. ''The role and impact of digital technology is still being widely underestimated in Europe.'' Liikanen said many European countries have pledged to spend several billion dollars to open up access to the Internet over the next three years. They also want to provide new tax incentives to spur growth in information technologies and encourage immigration of workers with Internet skills. But many politicians and businessmen acknowledge that Europe will only achieve a real breakthrough in new technologies when the state's role as ultimate provider and protector is changed so that a premium is placed on individual initiative. ''The state is still regarded as the savior of last resort in Europe,'' Friedbert Pflueger, a Christian Democratic member of the German parliament who heads its committee on European affairs, said. ''But there is a young generation coming along that no longer believes business should always get this kind of protection. Governments can no longer afford to keep bailing out companies.'' There is broad agreement that Europe's failure to capitalize on new technologies is not due to a shortfall of scientific accomplishments. Research centers in Britain, Scandinavia, France, Germany and Switzerland are doing cutting-edge work in medical, nuclear and genetic technologies. Many modern processes and inventions are developed in Europe, only to be harnessed for commercial use in the United States. ''We Brits invented radar, the internal combustion engine and even the World Wide Web, yet we can't really claim we've developed first-class industries from any of those discoveries,'' said Roger Liddle, a top policy planner for British Prime Minister Tony Blair. ''It's hard to explain the reasons for this kind of short circuit, but it definitely needs to be fixed.'' In explaining Europe's lag in the commercial exploitation of new technologies, experts often point to a cultural aversion to risk and innovation. Banks prefer to stick with well-established firms and loathe taking a gamble on a promising idea by a bold entrepreneur -- just the kind of person who, by contrast, can find plenty of venture capital in the United States. Among computer and Internet companies, Europe's high communications costs inhibit consumers who would like to surf the Web for hours on end. In addition, many of the giant telephone monopolies in Europe are being dismantled very slowly, with former state-run companies in Germany, France and Italy still using their traditional ties to governments to block competitors or any further deregulation. ''Europe just doesn't get the message,'' said Thomas Middelhoff, chief executive of Europe's largest media conglomerate, Bertelsmann AG. ''Governments are still trying to protect the old industrial structure. They don't seem to understand that the best way to deal with high unemployment is to put money into developing new technologies, not preserving old ones.'' Middelhoff said it will take at least four years for Europe to reach the 50 percent level of computer penetration now found in the United States. ''We need to get computers into schools in a big way so that a new generation grows up feeling comfortable with the Internet,'' he said. ''Right now there are just a few projects that amount to window dressing.'' Some experts say the American ascendancy in the new technologies of the 1990s could become the galvanizing threat that pulls Europe together. Fears about the takeover of European industry through massive direct American investments in the 1960s -- as described at the time in his best-selling book ''The American Challenge'' by French author Jean-Jacques Servan Schreiber -- provided an impetus for closer integration and the eventual expansion of the common market that formed the nucleus of the European Union. BREAKING NEWS DIGESTS