European companies 'afraid of new tech'

Europe is lagging behind the US and Asia when it comes to investing in new technology, according to an industry veteran and leading venture capitalist

European companies are 'gun-shy' when it comes to implementing new technology, making the region a lot harder to sell into than the US or Asia, according to a leading venture capitalist.

Speaking at the UK Technology Partnering and Investment Forum in London, Joe Schoendorf of Accel Partners said that Europe is lagging behind the US and Asia when it comes to adopting emerging technology and embracing start-ups.

Schoendorf said his firm is working on statistics to back up this view and recounted a conversation he had with Eric Benhamou, chairman of networking giant 3Com's board of directors, who allegedly stipulates that he will not sit on the board of any start-up that decides to open an office in Europe before Asia. "It's harder to sell new technology into Europe than ever. People are gun-shy," he said.

If Schoendorf's observations are accurate then UK companies can at least take some comfort from the fact that they are at the head of the pack when it comes to European tech spending. Figures released by the European Information Technology Observatory (EITO) last month show that UK spending on IT and telecoms services in 2004 will exceed that of many other Western European countries.

The overall Western European market is expected to grow by 3.1 percent, compared to only 0.6 percent in 2003, with the UK expected have a particularly buoyant growth rate of 3.2 percent. This means the UK's spending will be worth £124.7bn euros (£83.3bn), which will be just enough to overtake Germany, currently the largest ICT economy in Europe.

Schoendorf, a former board member of Macromedia and 18-year veteran at HP, claimed that the lack of investment in technology in Europe is not for a lack new products or companies. "The people I have met in Europe are as innovative and smart as anyone. When I am in meetings I can't tell that I am not in Silicon Valley," he said.

He identified Asia and China in particular as another real source of innovation, claiming he had met a start-up in Shanghai which was working on the next "Quantum leap" in Wi-Fi. "If you think China is about cheap labour and outsourcing then you couldn't be more wrong," he added.

But although he praised the entrepreneurial atmosphere in Asia, Schoendorf admitted that the region has its problems when it comes to the protection of intellectual property with around 90 percent of Windows in China being unlicensed.

He also cited the example of Huawei Technologies, one of the largest telecommunications companies in China, which is being sued by Cisco for patent infringement. Cisco claims Huawei unlawfully copied and misappropriated the US networking giant's software including its source code.

The UK Technology Partnering and Investment Forum is run by the European Technology Forum, a division of CNET Networks UK, which also publishes ZDNet UK.