Slow but Steady Growth is Future of German IT Branch
March 13, 2002
Germany’s Chancellor Gerhard Schröder opened this year’s CeBIT computer fair with resounding words of confidence and optimism for the German IT branch.
The domestic computer and telecommunications industry is on the verge of a new era and improved growth opportunities, Schröder announced on Tuesday.
But not everyone in the technology sector is as optimistic as the Chancellor. In fact, most of the German IT leaders at CeBIT have been issuing words of caution and skepticism. The recent announcement of economic upswing in America does not automatically translate to increased sales in Germany, they say.
"I have a great deal of respect for Gerhard Schröder", said the director of the technology group NCR Germany, Werner Sülzer. "But to speak of a market upturn at this time is overstating things." An economic recovery won’t really start sinking in until September or October, Sülzer told the Associated Press news service.
Not all gloom and doom
The situation in Germany’s IT branch, however, is not entirely negative. Analysts are forecasting a slight growth for the German high-tech companies this year.
Recent reports by Germany’s Association for IT and Telecommunications (Bitkom) estimate this year’s growth to be around 4.2 percent, a marked improvement from last year’s 1.7 percent. Total output for 2002 is expected to be around 143.6 billion euro.
Although the forecast for 2002 isn’t anywhere near the dramatic figures booked in the fat days of 2000, German IT companies are doing well, keeping up a steady performance.
Gone are the days of fly-by-night dot-coms and rampant software producers. There are far fewer daring start-ups are no more mass hirings. But the current cool-down is not necessarily a bad thing, says Jörg Menno Harms, Hewlett-Packard’s director for the German branch.
"It’s like a thunderstorm that clears the air," Harms said at CeBIT. "The hot surge of energy has died down. It’s still a little bit cool and there’s no reason for euphoria, but the fresh air is good for developing new ideas."
IT push yields a world player
Over the last few years, German IT companies invested significantly in research and development. They were quick to embrace new technology and push for wide-scale standardization such as the Universal Mobile Telecommunications System (UMTS). Politically, too, the IT branch was active in its campaign for the liberalization of the market.
The effort has paid off. Innovative technology and better consumer oriented products have turned the German IT branch into a world player. With a 20 billion euro annual turnover, Germany’s IT market is Europe’s largest.
Globally, Germany is ranked third in the telecommunications sector and eighth in the number of internet users. Ninety percent of all German companies are online and use the web for conducting business. In terms of ISDN and DSL, Germany has taken over the US as the world’s leader for new telecommunications technology.
Beyond the telephone
The telecommunication sector is the driving force in Germany’s IT industry. With an expected six percent jump in sales this year, German companies are closing in on American dominance in the field of mobile communications.
"The telecommunication services are driving the entire IT market," said Volker Jung, President of Bitkom, in reference to innovations in third generation mobile phones and the establishment of UMTS.
In February Bitkom reported a staggering 20 million new cable communication hook ups for 2001. In the near future German consumers will have an unprecedented range of choices for telecommunications.
The spectrum spans the field of technology from the traditional analog telephone connection to internet and high-speed ISDN and DSL, from wireless LAN and satellite transfers to mobile UMTS and broadband.
Over the next few years, the telecommunication sector in Germany will continue to expand, bringing with it economic stimulus for the entire IT industry, new employment opportunities and technical innovations.
As Steve Balmer, CEO of Microsoft, said during his keynote speech at CeBIT, there is ample reason to look to the future with optimism.
"It is easy to get caught up in the depression or euphoria of the moment. But there’s always more potential and opportunity to positively impact the world with information technology."