A Year Ago: UK hits back at US 'grow faster' demands

This story first appeared Tue, 26 Aug 1997 16:03:22 GMT

UK PC industry figures are hitting back at those damn Yankees who criticise the lack of sales growth in Europe.

Microsoft's Bill Gates, Intel's Andrew Grove and 'Being Digital' author Nicholas Negroponte are among those luminaries who have recently blamed Europe for unsatisfactory growth. Now the Brits are hitting back... or at least, in our mild mannered way, spelling out the reasons for our laggard performance.

Adrian O'Connell, research analyst for Dataquest Europe, says the picture isn't all that bad anyhow. "European growth is reasonable but the US is certainly outpacing Asia-Pacific and Europe. In Europe's corporations, the installed base is high; it's in consumer where we're hurting," he claims. Recent Dataquest figures suggest the European consumer PC market grew just nine per cent between Q2 1996 and 1997.

According to O'Connell, macro-economic situations are key: "Germany has a very tough economy at the moment and other countries are struggling to match EMU (European Monetary Union) criteria so there hasn't been money available." The UK and France have also had general elections in the past 12 months, leading to economic uncertainty in the minds of potential PC buyers.

O'Connell also notes a difference in the US and European telecommunications infrastructure, slowing Internet acceptance in Europe. "In the US you can stay on the Net all day. Here and in much of Europe every second counts because of the cost of call charges."

An improvement may come in the shape of government intervention. UK prime minister Tony Blair has promised Internet access for every schoolchild although O'Connell remains sceptical. "If it's being talked about it's positive, but it depends on the outcome. It's still a fair question to ask whether the [UK] man in the street really understands what a PC can do for him."

In general though, O'Connell is optimistic about a return to sunnier times for PC growth in Europe. "In corporations, Europe has a strong installed base of PCs. It's about getting the upgrade cycles through quicker. With a stronger economy, Europe could be passing US growth rates inside a couple of years.

Also, the confusion regarding PC processors could be clearing up. Last year's fourth quarter wasn't great, partly because if the late launch of the Pentium MMX."

Martin Pickering, director of AstraSoft, a UK sales and marketing consultancy that distributes US software, has a sharp jibe for Americans unimpressed with Europe's PC acceptance. "Maybe we're too busy worrying about more cerebral matters such as creating classic cinema and writing great plays," he quips.

Pickering, who has held key European posts in North American companies such as Quarterdeck and Corel, says that US companies should be aware of the differences that exist between their native country and Europe, and also of differences between individual European countries.

"Various products can massively outperform in Europe compared to the US," he says, giving Quarterdeck's CleanSweep deletion utility as an example. "Different products do well in different markets: Ford doesn't produce one car for the whole world, the Lincoln Continental wasn't sold here. VCRs sell more heavily in Europe than they do in the US where cable TV is rife. Sometimes with US hi-tech companies there are presumptive market share figures. The more time they spend understanding Europe, the greater reward they'll get."

Pickering also notes "the affordability factor" - a combination of higher ticket prices and lower disposable income conspiring to hurt Europe. "We don't have tax-free mail-order states and the distribution and dealer margins are higher," he moans.

"Also, the costs of setting up in Europe are enormous for US companies, and that gets passed on. You've also got to add the costs of differing languages and currencies within Europe. In the US it's completely different. There you can have one technical support centre with everybody speaking English; here, there are five or six major languages. There's also more piracy here."

That said, Pickering agrees that Europe could do more to create PC growth. "There's a lot to be said for [the criticisms]. [Charitable promotions] in High Street supermarkets are doing more for putting PCs in schools than the government. Maybe the attitude of guys in stuffy suits has to change."