International Business: EUROPE
WILL EUROPE ROAR DOWN THE INFOBAHN?
Europe may have lost the computer wars to the U.S., but it's hoping for a big comeback in cyberspace. European companies--from giant telecom operators to pint-sized startups--are looking to get in on a high-tech revolution. This time it's the nascent market in multimedia and other I-way products, an industry that could be generating revenues of $39 billion in Europe alone by 2000.
Even as leaders of the industrial world met in Brussels in late February to sketch a global road map for the Infobahn, European companies were toiling furiously to make sure they wouldn't be left behind (table). In Germany, Mercedes-Benz and BMW were testing a Deutsche Telekom system to design cars faster via computer links with suppliers. British Telecommunications PLC was developing software for airlines to run interactive in-flight entertainment systems that offer everything from stock quotes to catalog shopping. And French software company CAP Gemini Sogeti was putting the final touches on a multimedia package that allows travel agents and their clients to take virtual- reality tours of cities and hotels.
BIG PUSH. To make sure this market will develop as fast as possible, Europe's digital hopefuls are turning up the heat on governments. They are pressuring policymakers to set international standards and accelerate telecom deregulation on the Continent, especially in Germany. "It's vital for Europeans to understand the cake is being cut now," says Rana Mainee, senior consultant at Inteco Corp., a British market research company.
On the consumer side, cable companies, water utilities, and telephone operators are pouring millions into interactive television tests. One of the most closely watched experiments is BT's expansion of its video-on-demand trials from 60 households to a market test over fiber-optic wires reaching 2,500 homes this summer. The $30 million trial will gauge how much Britons will pay for such goodies as home shopping, banking at home, fashion videos, and Hollywood movies. All sorts of companies, including travel agency Thomas Cook, bookseller W.H. Smith, and record company Polygram are participating. Not to be outdone, the German city of Stuttgart is starting an even bigger trial of 65 interactive programs to 4,000 homes, businesses, hospitals, and schools.
Yet while interactive TV has received the most publicity, market researchers say the payoff is still years away. Creating multimedia products for business can generate substantial revenues a lot faster. That's why Deutsche Telekom has been pouring $50 million a year into business applications. The phone operator will soon launch a multimedia project at Lufthansa to slash aircraft repair times. When problems arise in flight, on-board computers will relay signals to the next airport, where repair crews can order parts and hold videoconferences with experts. Other projects include a program to introduce lean administration at state and local government and teleservices for medicine, education, and training.
As the giant companies invest millions, hundreds of startups are also toiling over new hardware and software to make the Internet hum with business. Paris-based Focale 7 launched its multimedia business with interactive educational videos for the government on tobacco and nutrition. The company is now seeking to market the videos in the U.S. Focale 7 has also proposed a project that would put a cornucopia of graphics and visual materials on France's 2 million small and midsize companies into an interactive video data bank. Companies looking for French partners could then access the data bank.
VIRTUAL WALK. There's a flood of new CD-ROMs. Munich-based Discreet Monsters/MacGuffin has produced a CD-ROM on how to use multimedia technology for banks, TV stations, media, and travel agencies. The program has won praise from former Apple Computer CEO John Sculley. Britain's three-year-old Dorling Kindersley Multimedia Ltd. has tripled its production staff to 150 in one year to create new CD-ROM titles. And tiny Paris-based CD-ROM maker Montparnasse Multimedia is best known for its virtual walk through the Louvre.
Europe is also coming on strong in homegrown online systems. Infogrames Entertainment, a 12-year-old French company that started out designing services for Minitel, the world's first online service, is now launching its own online product. Called Infonie and debuting in March, it has lined up 50 content providers already. Infonie's slick, colorful interactive format may supercede the aging Minitel system.
The range of European offerings is getting known across the Atlantic. "I came with low expectations and found companies that marry technology development with the media world," says James Bernie Rice, director of consumer software at IBM Multimedia Publishing Studio in Atlanta. "Europe will win in edutainment, while the U.S. will dominate in shoot-'em-up games." Satjiv S. Chahil, vice-president and manager of Apple Computer Inc.'s new media division, routinely visits Europe and Asia to seek out interesting content developers. "I'm finding CD-ROM titles here the Japanese would love," says Chahil.
Even with such strengths, the real key to Europe's success in cyberspace will be a different corporate attitude. European companies once dithered forever in the lab only to see their technology commercialized by others. Now, the Europeans are innovating faster and racing new technologies to market. Europe so far has surprised everyone by getting out of the starting gate so fast in multimedia. If the new mind-set sticks, it may yet make it into the winner's circle.
EUROPE'S MULTIMEDIA DRIVE
-- Hundreds of small companies are producing interactive CD-ROM titles in such areas as art and business
-- Deutsche Telekom is working with Microsoft and IBM to replace its text-driven online service with a snazzy new service using graphics, sound, and video images
-- Lufthansa is uorking with Deutsche Telekom on a multimedia program to speed aircraft repairs
-- British Telecom is launching one of Europe's most ambitious interactive television experiments with the help of Oracle and Apple
-- France's Thomson Multimedia recently allied with Sun Microsystems in interactive services such as video-on-demand and home shopping
DATA: COMPANY REPORTS, BUSINESS WEEKBy Gail Edmondson, with Marsha Johnston, in Paris and Julia Flynn in London