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It was a triumphant moment. On July 18, Ionica PLC founder Nigel Playford and a few colleagues huddled around a computer screen, watching Ionica's stock on its first day of trading. Within minutes, investors had turned the six-year-old telephone company that competes with British Telecom into Cambridge's first business with a market capitalization of $1 billion. Playford broke out the bubbly. ''Cambridge is one hell of a good place to set up a company,'' says the 41-year-old.

He's not the only one who feels that way. With a cluster of 1,200 technology companies, the ancient market town of Cambridge is becoming one of Europe's hottest high-tech centers. Although the average company has only 12 employees, on a collective basis they are credited with creating 35,000 jobs and pushing regional unemployment levels down to 3.5%, far below Britain's national average of 5.7%. ''Cambridge is going to be one of the real engines for growth within Britain and Europe,'' says David Cleevely, managing director of Analysys, a Cambridge telecom consultancy.

It's already happening. Local companies are flourishing in a broad range of tech fields, including multimedia software, networking, and wireless communications. Many are spawned by ideas from Cambridge University. Stewart Lang, a computer-graphics researcher at the university with one startup success already, has launched Autostereo Systems to commercialize technology that makes an image on a screen look three-dimensional by showing it from 28 different angles. And Acorn Computer Group, launched by Cambridge graduate and super-entrepreneur Hermann Hauser, is one of the first designers of network computers, low-cost terminals that access the Net at high speeds.

Already, Cambridge's homegrown tech companies boast combined annual revenues of $2.5 billion. Add sales from the global technology companies that have invested in the area, such as Nokia, and that figure doubles, to more than $5 billion. Xerox, Olivetti, Oracle, Hitachi, and the Stanford Research Institute have set up Cambridge ''listening posts'' to get access to research that comes from the university's labs.

NO IMITATIONS HERE. The most recent arrival is Microsoft Corp., which announced in June it would invest $80 million for a Cambridge research lab. Microsoft also is investing $16 million in a new venture-capital fund run by Hauser, who has started or co-founded about 25 companies in the Cambridge area, including semiconductor research company Advanced RISC Machines.

For all its tech success, though, Cambridge doesn't see itself as a Silicon Valley clone. ''People sometimes use the expression 'Silicon Fen,''' to describe what's happening here, says Roger Needham, a Cambridge University computer scientist who was recruited to head Microsoft's new Cambridge lab. ''But I object to that term. Cambridge doesn't imitate anything, thank you.''

The university town also eschews Silicon Valley's more blatant materialism. Even some of Cambridge's most powerful players prefer to pedal to work each day on beat-up bicycles. Although Cambridge has become a hotbed for high-tech startups, that doesn't mean it's shedding its centuries-old traditions.

By Julia Flynn in Cambridge

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Updated Aug. 7, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.
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