Global Economics

Sights and Sounds of CeBit


The presentations at the computer fair in Hanover, Germany, showed everything from Russian voting machines to 108-inch TV screens

Call it the battle of the big-screen TVs. While much of the floor space at the CeBit computer fair in Hanover is devoted to products only serious techies can love, the big consumer-electronics makers still come to show off their latest products, including television sets. But not just any television sets.

Japan's Sharp Electronics claimed bragging rights for the biggest screen using liquid crystal display (LCD), as opposed to plasma, technology. If it were a mattress, the 108-inch screen would be big enough to sleep on. But not far away, Italy's Tecnovision displayed a billboard-like 205-inch screen, the size of a small swimming pool. The big difference: Sharp's eerily realistic high-definition display offered dramatically better resolution than the Tecnovision, which uses light-emitting diodes (LEDs). Sharp argues that LCD screens, which have been gaining market share, are more energy efficient and easier to repair than plasma.

Software Trends

The gigantic Sharp TV isn't yet on the market and the company hasn't given a launch date. But, says Hans Kleis, chief executive officer of Sharp Electronics Europe, "We definitely will produce this."

Microsoft (MSFT) highlighted an industry trend and earned plaudits from analysts when it released details of its business software financing program at the Convergence 2007 event in San Diego this week. In Hanover, Germany's SAP (SAP) disclosed details of its own finance program designed to make its enterprise software more affordable to smaller businesses.

What's unusual about the program is the source of capital: German electronics giant Siemens (SI). The Munich-based company's Siemens Financial Services unit is providing the funding to SAP customers and assuming the credit risk. Banks typically shy from such funding, because there is no significant collateral.

Finance Issues

The year-old financing program, available worldwide, grows out of studies showing that up-front costs are a big obstacle for midsized companies who might be SAP customers. "Customers said, 'I would like to have the benefits before I have the costs,'"says Thomas Baur, head of Global SAP financing.

Customers are likely to buy more software and services if they are borrowing the money. In Microsoft's case, market researcher Ovum estimates the size of software deals increases by as much as 90%. "A partner who properly uses finance is likely to make more money and make it sooner than a partner who doesn't embrace financing," Ovum analyst David Mitchell says in a note to customers.

SAP is financing not only the cost of its own products, but also ancillary costs such as maintenance or hiring consultants. That's an indication of how badly SAP wants to push deeper into the midsize market.

Fighting France

Robert Cresanti, Undersecretary for Technology in the U.S. Commerce Dept., didn't use the term "cheese-eating surrender monkeys," but he did express displeasure with the French government's attempts to force Apple (AAPL) to open iTunes to competitors. "European companies who come into the U.S. have to contend with competition from U.S. companies, but they don't have to contend with being pulled down by the U.S. government," Cresanti told a small group of reporters at CeBit.

French officials, who have gotten support from the European Union and other European governments, contend that iTunes has too much market power, since only iPods can play songs purchased from the online music site. But Cresanti said any 12-year-old knows how to get around that restriction. "It's a non-issue. I don't understand why the French government is hooking on to it."

Other U.S. companies including Microsoft and eBay (EBAY) have had problems in the European Union, Cresanti noted. "That concerns us."

Given the dominance of the mobile handset market by Nokia (NOK) and Motorola (MOT), it might seem a suicide mission for a small company to try to compete. But Taiwan's E-Ten Information Systems seems to have found a niche selling high-end personal digital assistants with mobile-phone capability.

Small but Impressive

With annual sales of about $150 million, mostly in Europe, Taipei-based E-Ten is puny compared to the giants. However, the company is profitable and growing, says President Wayne Ma. Its elegant handsets, selling for $650 to $800, are aimed at business users, as well as the kind of people who want a status item or just have to have the latest technology.

E-Ten, which has just started selling its devices in the U.S., prides itself on being on the cutting edge of technology. For example, its devices, sold under the Glofiish brand, had built-in global positioning last year. Nokia is just now launching its first mass-market phone with built-in GPS.

To compete with the giants' much larger R&D budgets, E-Ten focuses on PDAs, introducing a half-dozen new models a year. It only designs for Microsoft's mobile operating system, vs. the Symbian O/S used by Nokia and others. "We need to be very focused," says Ma.

Russia Surprises

The official partner nation at CeBit this year was Russia, which was fitting, considering the degree to which Western European companies are drawing on Russian software talent. Sun Microsystems (SUNW), with operations in St. Petersburg, is one example of a company using Russian developers.

The Russians took over a large space in one exhibition hall to showcase their own high-tech products. One product line was surprising, considering that Russia is not known for its democratic traditions and President Vladimir Putin is busy cracking down on press freedom: voting machines. A flyer from manufacturer SRI Voskhod promises "high integrity of results."

Maybe they can sell some to the state of Florida.


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