This article is more than 1 year old

IDC: will Europe leapfrog US in e-business?

Ah, but what is Europe?

Analysis There's trouble brewing when American market researchers make pronouncements about the behaviour of Europan Internet markets without having any real appreciation of the cultural issues. There's still a great tendency for them to regard Europe as one market, when in reality multilingual countries like Belgium and Switzerland effectively have several markets. Nor for that matter is it at all logical to make EMEA - Europe, the Middle East and Africa - into a single region: it's about as daft as combining Cuba and Connecticut.

At the IDC European IT Forum in Monaco last week, the theme "eEurope: will Europe leapfrog the US in eBusiness?" resulted in an undercurrent of dissatisfaction from the audience. The market researchers applied American norms to Europe, but there was a bigger issue concerning the validity of any US-European comparison - because of cultural differences.

In any event, Internet commerce in Europe is much affected by the geography - the distance to reasonable shopping areas - and by cultural characteristics like the desire of the French to touch the product before purchasing it, while Germans are more likely to want to meet senior staff and be assured about product quality and service before making a purchase (hence Germany's trade fairs). Brits seem more likely to be interested in price, and tend to buy on the Internet if it is less expensive to do so. There is also something of a north-south divide in Europe that separates those who are more inclined to buy through the Internet, and those who are not.

Nico gets it right?
Of the speakers who did attempt to address the US-European issues (many speakers just gave boring and blatant sales pitches) Nicholas Negroponte, founder and director of the MIT Media Lab, got it about right when he conjectured that it wasn't so much the technical and infrastructure differences in Europe (regulation, telecom costs, venture capital) that accounted for the difference with the US, but the culture. Negroponte also had his finger near the pulse when he suggested that Europe was risk-averse and too compartmentalised, but his claim that Europe had attitudes that were too rigid towards working hours, weekends and vacations was a generalisation that was at odds with his earlier observation about cultural differences. The variations within Europe are tribal more than national, and exist within countries as well.

Jeremy Rifkin, president of the Foundation on Economic Trends, pointed out that in Europe there is greater sensitivity towards the difference between culture and commerce, with Europeans still believing that culture precedes commerce and that people work in order to be able to live, while in the US "we've come to believe that we live to work". Deutsche Bank chief economist Norbert Walter disagreed with Rifkin, and claimed - to considerable applause - that "the happiest Europeans are the ones who work hard and enjoy it".

With few exceptions, it was the executives from the bigger companies who were either too lazy or unable to present something beyond a sales pitch. Michael Dell largely relied on screen shots from his web site, and gave the impression of being a major lottery winner when he was interviewed after his presentation. Getronics and Novell also dished up corporate slide presentations, but Peter Blackmore of Compaq did keep decently away from giving a pitch.

Worst of the lot was Microsoft president Steve Ballmer, who not only did not turn up or apologise for his absence, but was supposed to be beamed in by satellite. In the event, there was no picture but there was considerable cross-talk from Microsoft's own control room in Seattle. It was hardly surprising that Ballmer professed to be "horrified" at the technology failure, but this may not have been entirely a Microsoft problem since the spanking new Grimaldi Forum in Monaco had been plagued by untested IT systems and serious telecom problems. Ballmer did say that .NET building blocks would be accessible from other operating systems, but it was hard to hear more.

IDC presented a somewhat condescending view of European e-business based on an American perception of what was Good, but clearly missed out on the cultural difference issue. IDC chairman Patrick McGovern told delegates that IDC expected Europe to pass the US in the number of Internet users next year, and increase its share of the world's IT economy from 28.6 per cent to 32.32 per cent in 2010. The western European new economy was expected to increase from just 9 per cent of that of the US to 89 per cent in 2004.

Diversity versus integration

John Gantz, IDC's chief research officer, paid lip service to European diversity and was clearly a fan of European integration, although the sub-textual reason appeared to be that this would be much more convenient for American companies. He also thought that Europeans were "very well equipped to deal with these differences" of culture, which was a reference to differences in Web investment and purchasing practices.

The impression that lingered for many delegates was that the problem of European e-business was one of largely American manufacture: dot com companies with silly valuations, solid losses, and little hope of recovering operating losses - which were hardly models for European successes.

The most bullish European Internet comment came from Erkki Liikanen, the European Commissioner responsible for the Information Society, as well as the eEurope action plan that is focussed on education, intellectual property issues, security and exploiting the Internet economy. He regretted that some people could not afford access, and that there was some anti-Internet sentiment in Europe.

But IDC's question as to whether Europe might leapfrog the US in e-commerce is about as relevant as whether a trans-Atlantic air ticket is purchased in Europe or the USA. Internet trade is fast becoming truly international, and the more important issues are going to be the cost of delivery services (it is very much more expensive for the same packet to be sent from Europe to the US than from the same addresses in the US to Europe) - and of course whether there will be inward VAT on Internet-ordered goods or services from outside the EU. Above all, Europe is not really a single market at all: it never was, and never will be. ®

More about

TIP US OFF

Send us news


Other stories you might like