Mark Harris

A new Cold War?
Are the world's economic superpowers squaring up for a technological Cold War, asks Mark Harris

The Yanks love our quaint accents and we can’t get enough of their TV shows, but things aren’t so chummy between Europe and the USA when it comes to technology. Europe has just activated the first test satellite in its Galileo network, designed to reduce our reliance on the current GPS navigation system, controlled by the US military. Despite objections from the Pentagon, who feared the systems might interfere with each other, Galileo is on track to have 30 satellites spanning the globe by 2008, delivering more accurate navigation information than the elderly GPS system.

The EU is also flexing its muscles against American software companies. The European Commission fined Microsoft nearly half a billion Euros in 2004 for abusing the dominence of its Windows operating systems. And commissioners are now threatening to charge the software giant another 2 million Euros every day until it releases further technical information to rivals.

Until recently, Europe and America used incompatible technologies for everything from TV broadcasts to mobile phones. You couldn’t buy a camcorder in America for use here, or even take your hairdryer on holiday, as the whole electrical system was (and still is) different. Intel’s Chairman of the Board Craig Barratt says, “If the whole world had gone to either 110V (USA) or 220V (Europe) with a common plug years ago, this obviously would have been better for consumers.”

It might have made trips to Disneyworld easier, but would it have been better for European companies? Quirky local standards enabled smaller countries to resist imports from the biggest global players, often the US. But those days are over, according to Craig Barratt: “Some regions look at local standards as a way to promote or protect local industry, without considering the larger impact. But in the long term, this makes technology more costly to the local user, and inhibits its spread abroad.”

Nowadays, both European and US companies are chasing customers in the rapidly growing Chinese and Indian markets – and that means developing technology that will work anywhere in the world. The region that can set the standards used globally will have a real competitive advantage - and the USA has a massive head-start: Microsoft alone is worth more five times the top 15 European technology companies put together. The US writes more than 80% of the world’s software, produces the most computer chips and, according to technology merchant bank Interregnum, spends over three times as much on high-tech research as Europe.

There are two main reason for this, says Interregnum CEO Ken Olisa: “With one or two exceptions, there are no European venture capitalists contributing money and expertise to help early stage companies grow. On the other hand, the US market contains hundreds of professional VCs, who last year invested over $20 billion in start-ups.” The US Government also subsidises smaller companies to a much larger extent than the EU.

Moreover, the USA chases business at the expense of ethics, alleges EU Vice President Margot Wallström. She’s worried about the way US companies like Google, Microsoft and Yahoo are blocking access for Chinese citizens to sites discussing democracy and human rights, at the behest of Beijing.

Whether Europe can turn its new-found confidence into technological dominence is anyone’s guess but Interregnum CEO Ken Olisa is optimistic: “Things are changing at a great rate. As a by-product of the internet boom, a new generation of IT entrepreneurs has emerged in Europe.” And as the launch of the Galileo satellite shows, the sky’s the limit.

Who'll win the tech Cold War?

High Definition TV - The next generation of digital broadcasts will be in super-sharp HDTV. Although transmission standards will differ around the globe, most 'HD Ready' sets should be usable worldwide - as long as you have the right power socket.
Europe or America? Dead heat. A rare example of international cooperation.

Satellite navigation - The EU claims its Galileo sat navs will be reliable enough to guide cars and planes automatically. But the American GPS system is already up and running, and is getting more precise all the time.
Europe or America? The Yanks, unless Pentagon generals go bonkers and turn it off before a battle.

Mobile phones - Despite there being almost as many mobile phone systems as there are countries, most modern (tri-band) handsets will work in both the USA and Europe. But the sluggish Americans have yet to even allocate frequencies for advanced 3G services.
Europe or America? Europe by a mile.

Video discs - To record or playback High Definition video, you'll need an all-American HD-DVD player, according to Microsoft, HP and Intel. But Philips and Sony hope their rival, higher capacity Blu-ray system will triumph.
Europe or America? Blu-ray has movies ready to go, and will be found in the new PlayStation 3 console.

Power - The chances of getting either continent to change its entire electricity grid and upgrade all devices with a plug are pretty slim.
Europe or America? Neither. Better get used to taking those multi-pronged power adaptors on holiday.

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