which favours in a limited scope the innovative SMES by public tenders) 26.5) The provision of incentives for spreading new, web-based social innovation solutions (crowdfunding and crowdsourcing).
and social network. 8) The funding programmes shall be suitable for supporting early stage innovation. 9) The modernization of the Act on venture capital and clarification of the incentive mechanisms. 36 3 vision and objectives The specific objectives related to
http://www. eurada. org/site/files/Smart%20regional%20specialisation-E. pdf. download on 6 june 2011 Eurada (2011/b:
10-11 march 2011 in Brussels. Brief Summary of the workshop. http://www. eurada. org/site/files/Snapshot-E. pdf. download on 6 june 2011 Fraunhofer (2012:
. ie To sign up for our email alerts contact us at info@forfas. ie or through the website.
These digital tools are more than simply the Internet, although that itself drives growth. 31 They include hardware, software applications,
since the emergence of the Internet age is that it has had lower productivity gains from ICT.
the benefits of Internet and computer use for productivity are established also well. A large number of studies in the late 1990s and early 2000s confirmed at a micro level that ICT has a positive effect on firm productivity in both the United states and Europe. 57 Varian et al.
and Germany increased revenues 8. 6 percent and decreased costs 2. 6 percent through the use of Internet business systems;
and labor productivity. 59 But studies have continued to show the benefits of ICT after the initial years of the Internet boom as well.
and globalization. 67 Another study found that 29 percent of Danish small manufacturers surveyed indicated that their competitive position was strengthened a great deal by doing business online. 68 Studies examining Swedish firms found that access to broadband Internet
The 2013 and 2014 World Economic Forum's Networked Readiness Index survey shows that the EU-15 and EU-13 trail behind the United states in ICT adoption, business-to-business Internet use, business-to-consumer Internet use,
reducing the revenue for websites that rely on ad-based business models. 106 This appears to be one reason the EU lags behind the United states in Internet companies.
or 16 percent to 40 percent of IT budgets. 109 Other examples of costly regulations that limit the effectiveness of IT investment include the new law requiring websites to obtain explicit consent before placing web cookies,
or legal effects. 110 The former policy is both overly ambiguous and burdensome, particularly to smaller websites,
and data collection taxes, directed specifically at large internet companies such as Google and Facebook. 125 Higher taxes on ICT-producing companies may raise the price of ICT goods and services for everyone else.
Moreover, the existing proposals are designed poorly and could easily penalize or deter startups: The french tax on data collection would tax companies based on the number of users they collect data on, apparently with no regard to the actual market value of the data.
With the great success of some of the world ICT leaders, such as Apple, Google, Intel,
including broadband telecommunications, Internet usage, and data. They should allow companies to more rapidly depreciate ICT investments for tax purposes,
less effective advertising reduces available revenue for websites and can cripple the growth of useful services.
and Daniel Castro, The Internet Economy 25 Years After. com (Information technology and Innovation Foundation, March 2010), http://www. itif. org/publications/internet-economy-25
Internet Matters: The Net's Sweeping Impact on Growth, Jobs, and Prosperity (Mckinsey Global Institute, May 2011). 32.
/download/9204051e. pdf? expires=1398953382&id=id&accname=ocid43017007&checksum=04b30d1bfc36e957bcfd995ccb443898. See also: Robert D. Atkinson and Andrew Mckay, Digital Prosperity:
and Gilles Koleda, L'économie Numérique et La Croissance (working paper, Coe-Rexecode, 2011), http://www. persee. fr/web/revues/home
The Projected Economic Benefits of the Internet In the United states, United kingdom, France, and Germany, Version 2. 0 (Cisco systems, Inc.,January 2002), http://www. netimpactstudy. com/Netimpact study report. pdf;
A Comparison of the Financial Impacts of Internet Business Solutions on European and North american SMES, Journal of Small Business Management, 45,3 (July 2007): 354-361.59.
on the World Economic Forum website, accessed May 7, 2014, http://www. weforum. org/issues/global-information-technology. 98.
Protecting Privacy, Transmitting Data, Moving Commerce (European Centre for International Political economy/U s. Chamber of commerce, March 2013), https://www. uschamber. com/sites/default
Talking points, Information Services Group, February 2013, http://www. isg-one. com/web/research-insights/talking-points/archive/1302. asp. 116.
Greg Sterling, France Wants To Tax Facebook, Google‘Personal data Collection,'Marketing Land, January 21, 2013, http://marketingland. com/france-wants-to-tax-facebook-google-personal data-collection-31196;
Jacob Albert, France Wants to Tax Data mining, and It's Not a Bad Idea, Quartz, January 22, 2013,
ZEW-Zentrum für Europäische Wirtschaftsforschung/Center for European Economic Research, June 2012), http://citeseerx. ist. psu. edu/viewdoc/download?
See for example the sectoral focus on this European commission website: European commission: Enterprise and Industry ICT for Competitiveness & Innovation,(accessed May 16, 2014) http://ec. europa. eu/enterprise/sectors/ict/.
or Uber, or Google, or...Bloombergview, February 12, 2014, http://www. bloombergview. com/articles/2014-02-12/france-loves-tech-but-not-amazon-or-uber-or-google-or.
-152. Miller and Atkinson, Are Robots Taking Our Jobs, or Making Them? 153. Nicholas Oulton, Long term Implications of the ICT Revolution:
Small companies create 85%of new jobs, Enterprise and Industry, European commission website, last modified January 16,
Part 1, Innovation Files (blog), June 22, 2012, http://www. innovationfiles. org/in-praise-of-big-business-part-1/.175.
accessed April 4, 2014), www. oecd-ilibrary. org/sites/entrepreneur aag-2013-en/02/02/index. html. 177.
/and Will not Let Norwegian Enterprises use Google Apps, Datatilsynet, January 25, 2012, http://www. datatilsynet. no/English/Publications/cloud-computing/Will not-let-Norwegian-enterprises-of-Google-Apps/.
/184. Merkel Proposes Secure European Web, BBC News, February 15, 2014, http://www. bbc. com/news/world-europe-26210053.185.
For example, Catherine Tucker has found that the EU privacy directive lowered online advertising effectiveness by 65 percent relative to the rest of the world.
Catherine Tucker, Economics of Privacy (MIT Sloan and NBER, November 15, 2012), http://www. ftc. gov/sites/default/files/documents/public events/fifth-annual
European Court Lets Users Erase Records on Web, New york times, May 13, 2014, sec. A. 188. Ibid. 189.
Mark Scott, Uber Faces Rebukes in Europe, Bits (blog) New york times, accessed April 18, 2014, http://bits. blogs. nytimes. com/2014/04/17/uber-faces-rebukes-in-europe/.
/191. Pillar I: Digital Single Market Digital Agenda for Europe, Enterprise and Industry, European commission website, accessed May 15, 2014, http://ec. europa. eu/digital-agenda/en/our-goals
/pillar-i-digital-single-market; Pillar VII: ICT-Enabled Benefits for EU Society Digital Agenda for Europe, PAGE 42 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Enterprise and Industry,
European commission website, accessed May 15, 2014, http://ec. europa. eu/digital-agenda/en/our-goals/pillar-vii-ict-enabled-benefits-eu-society.
FOR MORE INFORMATION, CONTACT ITIF BY PHONE AT 202.449.1351, BY EMAIL AT MAIL@ITIF. ORG,
ONLINE AT WWW. ITIF. ORG, JOIN ITIF ON LINKEDIN OR FOLLOW ITIF ON TWITTER@ITIFDC AND ON FACEBOOK. COM/INNOVATIONPOLICY
Enterprise and Industry Innovation Union Scoreboard 2014 More information on the European union is available on the Internet (http://europa. eu) Cataloguing data can be found at the end of this publication.
Cover picture: istock 000020052023large Konradlew European union, 2014 Reproduction is authorised provided the source is acknowledged. Printed in Belgium PRINTED ON CHLORINE FREE PAPER Legal notice:
The 2010 Methodology report provides detailed instructions how to calculate this indicator (http://www. proinno-europe. eu/sites/default/files/page/11/12/IUS 2010 METHODOLOGY REPORT. pdf). 88 Innovation Union
You can obtain their contact details on the Internet (http://ec. europa. eu) or by sending a fax to+352 2929-42758.
‘research articles',‘research reviews',notes'and‘letters')published in the Web of Science database. These co-publications have been allocated to one
http://www. proinno-europe. eu/EIS2008/website/docs/EIS 2008 METHODOLOGY REPORT. pdf) OECD-JRC (2008), Handbook on Constructing Composite Indicators:
A great deal of additional information on the European union is available on the Internet. It can be accessed through the Europa server http://europa. eu/.JRC79478 EUR 25964 EN ISBN 978-92-79-29828-8 (pdf) ISSN 1831-9424 (online) doi:
i e. number of R&d sites. Hence, the line value function is W=wij, where ij is the link between two countries
Arcs are weighted by the number of sites owned by country i (a) and the number of sites located in country
i (b). The size of nodes is a function of the number of R&d types a country's firms"receive"through R&d centres located abroad (a)
Software for Social network Analysis.'Harvard, MA: Analytic Technologies..30 high level of GDP and a sound R&d landscape.
it may be a sign of a success from the creation of international R&d sites in the form of inventions developed with domestic inventors,
we observe that it is highly relevant for both the number of R&d sites and R&d types.
Moreover, the closeness centrality coefficient has a very strong positive effect on the number of R&d sites as well as on the number of R&d types existing per link.
countries with a higher number of linkages with other countries tend to have less intensive relationships in terms of the number of R&d sites
'Social networks, 20:2, 135-41. Borgatti, S. & Everett, M. 2000.''Models of core/periphery structures.'
'Social networks, 21:4, 375-95. Borgatti, S. P.,Everett, M. G. & Freeman, L. C. 2002.'
Software for Social network Analysis.'Harvard, MA: Analytic Technologies. Boutellier, R.,Gassmann, O. & von Zedtwitz, M. 2008.
'The Use of Social network Analysis in Knowledge Diffusion Research from Patent Data.''Paper presented at International Conference on Advances in Social network Analysis and Mining.
Dachs, B. & Pyka, A. 2010.''What drives the internationalisation of innovation? Evidence from European patent data.'
'The Evolution of the World Trade Web.''Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
'Centrality in social networks conceptual clarification.''Social networks, 1: 3, 215-39. Garlaschelli, D. & Loffredo, M. 2005.'
'Structure and evolution of the world trade network.''Market Dynamics and Quantitative Economics Selection of papers presented at the First Bonzenfreies Colloquiumon Market Dynamics and Quantitative Economics, 355:1, 138-44.44 Gibbons, D. E. 2004.'
and visibility on the Web.''Scientometrics, 60:3, 409-20. Kuemmerle, W. 1999.''The Drivers of Foreign Direct Investment into Research and development:
'Topology of the world trade web.''Physical Review, E68: 1, 015101. Shieh, Y.-Y. & Fouladi, R. T. 2003.'
we apply social network analysis to study the locations of international R&d centres and the relationships between the countries owning
A great deal of additional information on the European union is available on the Internet. It can be accessed through the Europa server http://europa. eu/.JRC81448 EUR 25961 EN ISBN 978-92-79-29825-7 (pdf) ISSN 1831-9424 (online) doi:
The objective of the study is to document the existence of innovation gaps between the EU and its main competitors in specific ICT sub-sectors namely web services,
US companies have been the most innovative in web services. Meanwhile, Asia is much stronger than both the USA
Case studies of Apple, Google and Robotdalen emphasize the importance of prior government intervention to form clusters, from
11 2. US-EU Innovation Performance in Web Services, Display Technologies and Robotics...13 2. 1 Web services...
15 Apple key lessons...16 Google key lessons...18 Amazon key lessons...19 Skype key lessons...
20 XING-key lessons...21 2. 2 Display technologies...21 Cambridge Display Technologies (CDT) key lessons...
Case studies Web Services, Display Technologies and Robotics...57 A1. 1 Web Services...57 Apple Corporation...
57 Amazon...60 Google...62 Skype...66 XING AG...71 6 A1. 2 Display technologies...
74 Cambridge Display Technology (CDT...74 Plastic Logic...77 Novaled AG...80 E Ink Corporation...
105 7 Executive Summary Innovation in US and EU companies was analysed in three ICT subsectors (web services, display technologies,
US companies have been the most innovative in web services. Meanwhile, Asia is much stronger than both the USA
with web services estimated at about €70 billion, flat panel displays worth about €75 billion and robotics valued at about €19 billion.
A key lesson from analysis of the three subsectors, particularly web applications, is the critical importance of higher education
Case studies of Apple, Google and Robotdalen emphasize the importance of prior government intervention to form clusters, from
and to some extent Google, has shown, innovation cannot be centred only on technological areas but must also be applied in product and service design.
From the US experience we know that Stanford university has had a tremendous impact on the emergence of high-tech companies in Silicon valley, starting with Hewlett packard all the way to Google.
Using a case study approach in three ICT sub-sectors (web services robotics and display technologies) the study examined the following questions:
and because the USA has clear advantage in one (web), the EU in another (robotics) and Asia has the advantage in the third (displays).
XING in web services; Novaled, E Ink, CDT and Plastic Logic in displays; and in robotics, Shadow Robot, R. U. Robots;
Chapter 3 ends with the policy suggestions that emerge from our analysis. 13 2. US-EU Innovation Performance in Web Services,
Web services, Display technologies, Robotics. Annual global revenues for the three sub-sectors show their relative significance,
with web services estimated at about $92 billion (about €70 billion), 3 flat panel displays worth about $99 billion (about €75 billion) 4 and robotics valued at about $25 billion
Clearly US companies have acquired a dominant position in web services, quickly building on innovative breakthroughs in software, design and new business models (e g.
Google, Apple and Amazon. Even so, there are well known examples of European innovation in this sub-sector, e g.
jostling for the lead in the early stage innovation in novel screen technologies (for 3 SCF Associates Ltd estimate based on the nine top web service providers'revenues in 2010
See the web services value chain in Appendix 3 for the verticalization strategy used by Apple, Google, etc.
In web services, however, the USA does lead, owing to combinations of successful first mover advantages, network effects and increasing returns.
and eventually acquired by leading USA web services players, first ebay and now Microsoft. In the following sections we analyse in more detail the development of companies in the three sub-sectors,
and we discuss the lessons that can be learnt from the case studies. 2. 1 Web services For this sub-sector,
Google being a good example. It is a sub-sector where the USA dominates with the largest players all being first movers Google in search, Facebook in social media, Apple in music content with itunes, ebay with online auctions and Amazon in online retail.
The cases studies analysed in this sub-sector show that the success stories are based on a combination of two elements.
First, the capital investment required to start an internet-based operation is relatively low. Start-up costs can be minimal
Facebook for instance, got off the ground initially using finance from the founder's parents, to buy servers and support programmers'costs (Kirkpatrick, 2010).
but overall the finance needed for a web services business will typically be millions or tens of millions of dollars,
The tangible deliverable is web software during the early stages. Most capital demands are restricted to web server farms (see the web services value chain in Appendix 2) and even these can be hosted by third party data centres who offer website services for start-ups.
Second, in the web services sub-sector, a successful venture will reach break even and commercial viability relatively quickly, usually less than five years.
Or put another way, if a web services start-up is not profitable within five years the founders
and investors will probably have moved on. Payroll expenses are kept typically 16 low as stock options can be used
Facebook has only 3, 200 staff yet 800 million users (Waters, 2012). Third, as illustrated by these numbers,
These three attributes make web-based start-ups attractive to VCS and so this sub-sector is characterized by the overriding presence of such investors.
Silicon valley for Google, Apple and Facebook, Seattle for Microsoft and Amazon. These US clusters have drawn on government local investments for R&d
and leading on to the West Coast around Stanford and UCLA. In contrast, the EU initiatives in web services that are successful tend to occupy specialized niches in the market.
and protect their position against US equivalents such as Linkedin. Both niche players and globally successful European ventures are attractive targets for acquisition.
Skype, for instance, is an example of a successful European web start-up that achieved global pre-eminence
In future web service markets, there may be new application areas (and accompanying business models) with global appeal in which the EU can develop major players.
and growth as a hardware manufacturer but also because of its later reinvention and move into web services.
and so moving to integrate web services into that experience was a natural course and part of its emphasis on design for ease of use.
The chosen structure of the itunes website has always been to exploit its ease of use
Thus the web service, at its inception, was coupled to the software (Apple's ios) and its hardware, the ipod originally,
because Apple had noted the enormous difficulty of using MP3 players, particularly with web services and PCS, at the time.
Apple thus moved into web services coupled to its Macintosh range, creating proprietary protocols for access
and download from its web content server. The key lesson here is to create verticalization using web services as one component (see Appendix 2 on value chains.
Apple was the first to do it followers are Google with Android and the various Android-based apps stores (with a Google smart phone or tablet possibly soon),
and Amazon with the Kindle e-reader and its accompanying tied book format. Influencing the whole value chain with a basic innovation
Google key lessons Google's success depended on two extraordinary, self-confident and highly talented people unwilling to follow the crowd.
Google's founders benefited from a very supportive and nurturing environment with mentors who were able to protect them
Public funding of basic research had a part to play in the Google success 19 story,
it is hard to identify any way in which Google directly benefitted from government support.
The lessons from Google are difficult to translate into policy support for innovation. It seems like a unique set of circumstances.
as Stanford did towards Google's founders. Amazon key lessons The more advantageous business environment in the USA was a key factor for Amazon's successful start up and growth in its first few years.
Websites would also have had to be language specific for the ordering process. The EU's highly variable tax and business conditions across the 27 Member States contrasts with the largely uniform situation in the USA.
which brought high-level personnel for technical positions, for building and then running web services in vast data centres with fast transaction processing, large customer databases and data mining for refined data analysis,
Strong network effects are important in web services for both viral marketing for retail but also networks of business angels,
Amazon's customer databases hold names, addresses, telephone numbers, email addresses, profiled preferences and, most important, credit card details of its 137 million customers.
first the entrepreneurial and creative impetus came from two individuals who identified the opportunity for voice over the internet.
(i e. national state municipality/regional) as some Member States in Europe or Asia would attempt to bring together. 21 XING-key lessons Xing is an example of a relative European success in Web services,
establishing a social network for professionals similar to Linkedin. Success has come from high quality management, a well-focused strategy and execution of a viable business model.
XING might seem to be a more risky venture than much larger web service players, such as Linkedin and Facebook.
So if there is to be government support for new ventures in the web services sub-sector (with support for clusters, tax-breaks,
These niches may hold the best chances to thrive against heavy competition from the USA and elsewhere in mainstream web services.
The safe harbour rules for the exemption of US web service providers from EU data protection laws, under
are a source of unequal opportunity between US and EU web applications. This is an important issue
The time frame for commercialization of web services is typically short only a few years; for complex technologies and where the market has yet to develop,
which means it is very different from internet start-ups. Moreover in a start-up company, it could take many years to perfect new technologies as revolutionary as replacing silicon with plastic transistors for a flexible electronic display.
be it setting up a web farm and then scaling it up to millions of users,
In this section we mostly discuss the role of venture capital in funding web applications in the USA
Internet start-ups are ideal VC investments, as our case studies of Google, Skype and XING show especially for US VCS,
characterized by rapid payback with low entry costs and are not capital intensive. Thus web services such as Facebook, ebay, Twitter, etc have been favoured strongly by the VC community.
Yet, the US VC industry has been investing in diverse sectors, and not only ICT or web applications and in large companies as well;
Lerner (2010), 16 (Table 3. 2) reports that...those public firms supported by venture funding employed 6%of the total public-company workforce most of these jobs high-salaried, skilled positions in the technology sector.
One reason why web applications companies have been founded and grown in the USA is because VC funds have been more readily available in the USA,
and far more recently in web services, e g. for Google. Here the protection of IPR through patents has allowed Apple to defend its position against newcomers attempting to enter some of its markets (e g. smart phones and tablets.
The competitive advantage from holding patents is behind Google's purchase of portfolios of patents from IBM, twice in 2011 and also the $12 billion acquisition of Motorola Mobility.
as seen in the robotics cases and in web services. Moreover they have increasing returns with volume across a whole sector
Note that the whole web services 40 subsector came into being and is still based on open source software for the World wide web, the internet communications and management protocols and the majority of web server operating systems (Forge, 2004).
There are also many examples of how open innovation principles are applied in the ICT industries, such as consumer electronics (Christensen et al, 2005.
Mach 3. 0. Note that where there are grey areas in the uses of IPR for web services
and their related devices (as in the web service provider verticalization model-see Appendix on business models) then major disputes are increasingly common between the dominant players,
This is the case in the Oracle plea against Google in April/May 2012 over the use of the Java language to write APIS for the Android operating system. 21 Patent pools may be used where a standard complex technology is being assembled
Willow Garage, supported by Google, has made open operating 42 systems for robots available, which are used widely in the academic and triple-helix style innovation communities driven by academia. 22 In contrast to patent pools,
and Google's Android. We may expect this importance will be amplified over the coming decades as all three figure in tomorrow's ICT world of mobile devices,
Mr Almunia, to Google on abuse of its significant market power, in search related practices (Alex Barker, 2012, Google told to change
such as operating systems, web servers, databases and office systems. Note that the role of the European commission in stimulating research development and innovation, RDI,
as in the case of Google or CDT. Sometimes, entrepreneurs were the driving force harnessing the skills of technicians (e g.
Google's founders benefited from a very supportive, nurturing environment, with mentors who were able to protect them
Case studies of Apple, Google and Robotdalen emphasize the importance of government intervention to form clusters from
The case studies of Google Apple, E Ink, irobot and Amazon emphasize that moving on to a new company is normal,
As already highlighted, in web applications there is little evidence of direct government intervention having an effect.
A key lesson from the experiences of all the subsectors, particularly web applications, is the critical importance of higher education and of local networks in the formation of clusters.
At Stanford, Google's founders benefited from a very supportive, nurturing environment, with mentors who were able to protect them
Case studies of Apple, Google and Robotdalen emphasize the importance of government intervention to form clusters from
Internet start-ups are ideal VC investments, as our case studies of Google, Skype and XING show having relatively low entry costs and low capital intensity.
Thus web services such as Facebook, Google, ebay, Twitter, etc are favoured strongly by the VC community.
As the examples of CDT and Plastic Logic in the case studies show, however, venture capital may be less likely to have the scale in time
A Roadmap for US ROBOTICS From Internet to Robotics, Computing Community Consortium and Computing Research Association, http://www. us-robotics. us/reports/CCC%20report. pdf Chandy, R.,Tellis, G,
a Silicon valley Adventure, Little, Brown, New york. Kirkpatrick, D. 2010), The Facebook Effect, Virgin Books. Kuczmarski, TD,(1996), What is innovation?
2008/09, British Business Angels Association, URN 10/994, http://www. bbaa. org. uk/sites/default/files/media/files/bbaa annual market report 2008-2009
Pierrakis, Y. and Collins, L. 2011), Crowdfunding Innovation, NESTA Blog, 25 november 2011, http://www. nesta. org. uk/assets/blog entries/crowdfunding innovation Piva
Report to the European Research Area Board, http://www. technopolis-group. com/resources/downloads/reports/Technopolis report to erab on vc and yollies october 2011. pdf Tellis, G.,Prabhu, J,
/aug2007/sb20070821 920025. htm Waters, R. 2012), Investors seek things to like on Facebook, Financial times, 3 february.
Case studies Web Services, Display Technologies and Robotics A1. 1 Web Services Apple Corporation Apple computer was founded in April 1976 in a garage in Los Altos near Cupertino
Today such innovative design is the key competitive edge in the consumer electronics sub-sector and web services.
Apple has changed radically, turning away from pure hardware and software for computing to combining bundles of web services.
More specifically, its itunes web service, for downloadable music tracks with a clever low pricing policy,
and its proprietary download software has revised the music industry. Equally, its smart phone, the iphone,
and its associated Apple Store web service for application(‘apps')purchases and download has revised the mobile cellular industry.
The plunge into Web-based services was been designed carefully to complement the simultaneous move into pure consumer products
Its websites for interactive and download services are aimed at a higher-end mass market. The net result is verticalization:
and services that in tandem lock in the end-user (see the web value chain in Appendix 2). It provides Apple control of every stage of the‘user experience'.
Its own websites form the direct distribution mechanism, bypassing content aggregators, content retailers and in the case of content for the iphone, the mobile operators.
Hence, consumers get the content they want with convenient app search, download and payment, while developers receive their fair share of revenue.
and virtually has leadership in new business models for the web platform and for its hardware and software products.
8 easy steps to beat Microsoft (and Google), presentation, 2010. Isaacson, W.,(2011) Steve jobs, Simon & Schuster, NY, USA.
Mike Nelson, ex IBM VP for internet technology, ex Visiting professor of web and internet impacts and innovation, now with CSC as internet specialist, WASHINGTON DC.
60 Amazon Amazon was formed in the first days of the Web, in 1995 in a warehouse in Seattle on the North West coast of the USA.
in books only, using the first‘Mosaic'web browser and its descendents such as Netscape. Its founder, Jeff Bezos, who came from a NY hedge fund background,
financing and massive success. In 1994 Jeff Bezos realized that he could create a retail website that would not have the limitations physical businesses encounter:
company reports) Amazon has had one of the fastest growths in the Internet's history even against ebay and Google.
Since 2007 it has had a successful and logical expansion into e-books with its own into e-readers (the Kindle family) combined with an e-library for charged-for titles for download as in the verticalized business mode for the web services
It then expanded overseas in the first five years via acquisition of web-based bookstores in the UK
Simon Forge SCF Associates Ltd All rights reserved 201211amazon has had one of the fastest growth rates in the history of the WEB-based industriesrevenues at 5 years from foundingus$ 0. 4 BNUS$
Bezos carefully assessed the advantages the internet could give him, and pushed them to their limits.
Amazon has shaped a quite classical business model with the Internet's specific advantages. It is not that disruptive just:
secondly that the web could boost customer care through phone and web call centres (although now this is considered a highly challengeable assertion);
and thirdly that web services enable high margin, lowest prices-again quite challengeable. Amazon's major advantage was its original innovation,
selling books over the internet. In getting there first, it grabbed the key position of first-mover.
So in the segment where it sits, it is far ahead of competitors like Barnes & noble who rated their own sales channel of shops as dominant and Amazon of minimal threat a flea at the most.
and so become the largest Internet retailer in the world, is the customer review section. It occupies the bottom of most product pages it was introduced as an early way to harness personal opinions on products, free.
In 1999 it tried to set up it own auction website, directly in competition with ebay.
auctions or social media (so far!.Instead it has expanded now into 16 product categories, from the first catalogue of books.
But it has lagged in social networking and social media, leaving Facebook and Zynga as leaders in the area.
For its next attack on other web services, it is hiring social media directors and launching into social media and games with software development.
Sources: Marcus, J. 2004) Amazonia, Five years at the epicentre of the dot com juggernaut, The New Press, NY, USA SEC Filing, Annual Report Financial reports online
, http://yahoo. brand. edgar-online. com/Displayfiling. aspx? dcn=0001193125-11-016253; http://uk. finance. yahoo. com/q/pr?
s=AMZN; Faber Novell: http://www. slideshare. net/fabernovel/amazoncom-the-hidden-empire Google Google Inc. is an American multinational public corporation,
headquartered in Mountain view, CA. It provides internet search and advertising services, as well as a plethora of online tools and platforms including:
Gmail, Maps and Youtube. Most of its Web-based products are funded free by Google's highly integrated online advertising platforms Adwords
and Adsense. 63 Google was founded in Menlo Park, CA in 1998 by Larry page and Sergey Brin while they were Phd candidates in computer science at Stanford university.
In 2006, the company moved to its current headquarters in Mountain view, California. The company's mission statement from the outset was"to organize the world's information
and make it universally accessible and useful"."35 The company has a well-known unofficial slogan"Don't be evil".
"36 Google's growth since its launch has been phenomenal, with annual revenue growing to almost $30 billion in a little over 10 years. 96%of revenue comes from advertising,
is still growing It is now valued at $190 billion. It is the most successful company of the internet age.
Initial innovation and start-up While conventional search engines ranked results by counting how many times the search terms appeared on the page,
Larry page's Phd research focused on analysing the relationships between websites, an approach akin to citation analysis,
whereby a website's relevance was determined by the number of pages, and the importance of those pages, that linked back to the original site.
Page and Brin's new search engine was called initially Backrub, because the system checked backlinks to estimate the importance of a site,
but was renamed Pagerank and then Google. In 2001, Google was granted a patent describing its Pagerank mechanism.
The patent was assigned officially to Stanford university with Lawrence Page as the inventor. Initially Google was very much an intellectual, scientific, Utopian endeavour.
Without doubt both Page and Brin were outstanding computer scientists but, beyond that, their most notable characteristic was their overwhelming self-belief as Barry Diller put it,
they were wildly self-possessed. 37 While Page and Brin knew they had a unique search engine,
initially they had no business plan that would monetize their innovation. Indeed, they were so uncertain about
Yahoo and Excite for $1m they turned it down. Google's success seems contradictory, the curious result of its founders'unstinting belief in pursuing
what they thought was right rather than the pursuit of commercial success. Initially there was no business plan
this was 35 http://www. google. com/about/corporate/company/36 http://investor. google. com/corporate/code-of-conduct. html 37 CEO, Interactivecorp.
their approach meant they did not follow the route of companies like Yahoo and Excite that sought to be portals for a variety of content.
Google wanted to get users off their site to where they wanted to go as soon as possible.
Better search was of less interest to Yahoo and Excite because they wanted users to stay on their site for
as long as possible so they could sell banner advertising. Page and Brin were opposed to advertising because they had a purist view of the world. 38 And unlike AOL,
Google did not have revenue from subscribers. The commercialization breakthrough for Google came when it found a way to monetize search.
Adwords gave it a way of auctioning advertising slots on the search page, favouring firms offering the highest bid price and high benefits to users.
Google has continued to innovate or acquire a wide range of software products. It offers online productivity software,
such as its Gmail email service, and social networking tools, including Orkut and, more recently, Google Buzz and Google+.
+Other applications include its web browser Google chrome, the Picasa photo organization and editing software, and the Google talk instant messaging application.
Google leads the development of the Android mobile operating system, as well as the new Google chrome OS. In August 2011, it acquired Motorola mobility for $11. 5 billion.
Despite this activity, some analysts believe that as the company has got bigger so quickly it is finding it difficult to maintain its success. 39 Google has insisted famously that its employees be allowed to spend 20%of their time working on projects other than their core work (Innovation Time out ITO.
This has led to some notable successes, e g. Gmail, Google news, Adsense and Orkut. But the policy of letting a thousand flowers bloom has also been difficult to manage,
and also has led to some mediocre products that have relied on the marketing power of the Google brand. 40 38 According to Ram Shiram (see Auletta,
p. 53). 39 Unleashing Google norms, running the rapid innovation engine, http://nbry. wordpress. com/2011/07/26/unleashing-google-norms-running-the-rapid-innovation-engine/40 http://smartstorming-blog. com/googles-8020-formula-it-can-work-for-you/;
/http://blogs. reuters. com/mediafile/2011/10/20/sergey%E2%80%99s-secret-google-projects -and-the-challenge-of-1000-blooming-flowers/65 Capital investment Google received about $1miilion in angel investment around the time it incorporated in September 1998, from Andy Bechtolsheim (cofounder of Sun microsystems) Ram Shiram
(ex Netscape), David Cheriton (Stanford computer science Professor), and Jeff Bezos41 (Amazon). In June 1999, a $25 million round of funding was announced,
with major investors including the venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital.
Google's initial public offering (IPO) took place five years later in August 2004. At that time Larry page, Sergey Brin,
and Eric Schmidt42 agreed to work together at Google for twenty years, until the year 2024.43 The sale of $1. 67 billion in shares gave Google a market capitalization of more than $23 billion.
The vast majority of the 271 million shares remained under the control of Google. Many of the Google's original employees became instant paper millionaires.
IPR was of great concern to Page and Brin and Backrub was kept under a cloak of secrecy.
Page was a huge admirer of Tesla and he was well aware that Tesla had shared carelessly his inventions with others.
Consequently the algorithms behind Pagerank were guarded zealously. However, as Phd research students, they were expected to present their work
and so a paper was prepared eventually and delivered in January 1998.44 Location: The company's location was determined very much by the location of Stanford university.
In its very early days, Google operated out of the living room of the graduate housing apartment Brin shared in Escondido Village.
The Google computers and server were stored in Page's graduate residence. Stanford university seem to have extended considerable tolerance to Page and Brin, turning a blind eye to them acquiring computing resources.
According to Battelle, At one point, the Backrub crawler consumed nearly half of Stanford's entire network bandwidth,
an extraordinary fact considering that Stanford was one of the best-networked institutions on the planet.
And in the fall of 1996 the project would regularly bring down Stanford's Internet connection. 45 It is hard to imagine a European university providing such a level of support to a couple of renegade Phd students,
Schmidt served as Google's CEO; he is now Executive Chairman. Prior to joining Google,
he was the chairman and CEO of Novell and chief technology officer at Sun microsystems. 43 http://money. cnn. com/2008/01/18/news/companies/google. fortune/index. htm
44 Page, Lawrence and Brin, Sergey and Motwani, Rajeev and Winograd, Terry (1999) The Pagerank Citation Ranking:
Bringing Order to the Web. Technical Report. Stanford Infolab. 45 John Batelle, The birth of Google, Wired, August 2005, http://www. wired. com/wired/archive/13.08/battelle. html 66 Human capital:
In Larry page and Sergey Brin, there was an unusual combination of intellectual excellence and extreme self-possession.
Google benefitted enormously from the pool of talented computer scientists and other Silicon valley engineers because of the dot com crash and failure of other firms.
Google was able to take its pick from the best of the talented people around.
The VCS who invested in Google thought that Page and Brin needed proper and experienced business leadership;
but really didn't want a business executive to run Google they thought of them as bureaucrats rather than engineers and entrepreneurs.
How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture, New york:
and chat over the internet. Skype was founded in 2003 by two Scandinavian entrepreneurs, Niklas Zennström and 67 Janus Friis,
Skype was acquired by ebay in September 2005 for $3. 1 billion, but relations between the founders and ebay soured as growth targets were missed.
A 70%stake was acquired by an investment group led by Silver lake (including the original founders) in November 2009,
In October 2011 the sale of Skype to Microsoft corp was completed for $8. 5 billion. 46 VOIP (voice-over-Internet protocol) has redefined the way telephone calls are made VOIP calls are made over the internet,
using the same underlying transport technology that a Web browser uses. Zennström and Friis identified the opportunity
since the marginal cost of a call on the internet is negligible. In contrast, traditionally a call over the public switched telephony network was determined by the distance of a call.
Skype became the global leader in internet voice communications, with more than 309 million registered users within five years of launch.
This undoubtedly led to ebay becoming disenchanted with Skype's performance and the seeming failure of synergies to emerge with ebay and its other big acquisition, online payment system, Paypal.
History and development The basis for the start-up of Skype was the coming together of the entrepreneurial skills of Zennström
and the ebay threatening to completely destabilize the company. Following the departure of Zennström and Friis,
Meanwhile ebay was preparing to float Skype via an IPO but Zennström and Friis were done not.
and Friis joining the Skype investor group with 14%ownership. ebay then sold 70%of Skype to the investor Group led by Silver lake. 47 http://www. prnewswire. co. uk/cgi/news/release?
and ebay got most of its money back in recouping $2. 55 billion. In essence Microsoft paid about $1000 per subscriber
which some have questioned as being excessive. 49 It is being seen as a defensive move by Microsoft to avoid Skype falling into the hands of Google,
a development that would also have troubled Facebook. Both Google and Facebook were reported to have been in talks to buy Skype. 50 The battle over the coming years for the VOIP market will be between Skype in the hands of Microsoft and Google talk, Apple Facetime and Facebook Chat.
Skype had a network of locations from the outset, with offices in Luxembourg, London, Stockholm, Tallinn, Tartu,
Former Skype personnel have founded tens of companies, primarily related to Internet services, some of which been successful.
Tech Europe, 10 may 2011, http://blogs. wsj. com/tech-europe/2011/05/10/niklas-zennstrom-the-man-who-sold-skypetwice/52 Pricewaterhousecoopers, Luxembourg:
http://www. pwc. lu/en lu/lu/doing-business-in-luxembourg/docs/pwc-luxloc. pdf 53 http://www. investinluxembourg. lu/ict/sites/ict
The social network that wasn't. The Big Money, 1 september 2009, http://web. archive. org/web/20100727140400/http://www. thebigmoney. com/articles/money-trail/2009/09/01
business social networking company. It offers a localized social networking defined by language for the business community by subscription.
The first launch was in German, across the German-speaking pale, for members in Austria and Switzerland,
in comparison, its US competitor, Linkedin, had 20m at that time. Headquarters are in Hamburg, Germany and it has 420 employees worldwide.
The web service is favoured by its membership for two main reasons-to do business and to promote careers.
It has enabled XING to evolve from a business networking platform into the web interface for a widening range of services, for business professionals around the world,
XING PR, 2011) Note that German privacy laws are quite clear that the kinds of things Facebook does may not be acceptable there,
or elsewhere in the EU in some MS. German social networking sites face strict local privacy laws, meaning they must undergo a long process of verification with all users positively opting-in before they can be signed up.
The sites are prohibited also from sharing certain user data with advertisers. But US companies are exempt from these rules under safe harbour agreements between the US and the European union.
Thus the company is not able to compete with Facebook on a level playing field. However whether this is a disadvantage in the long run is unclear as prosecutions of Facebook
Google (especially Youtube) and other US web service providers may force them to align with EU standards of privacy in the future as legal processes develop.
XING has been intent on monetizing its user base-without alienating them: Cleverly, XING has expanded carefully its range of offerings into adjacent key areas that have high growth potential.
Compared say to other websites, 73 or to other services industries (utilities, mobile operators, this appears to be comparatively high).
Against the rivals from the USA, such as Linkedin, XING has a far better position, compared to those European national pure social networking sites in competition with Facebook.
For example, the Studivz group of three websites were collectively the German market leader with 13. 8m users,
with Facebook growing rapidly (over 11. 5m in the first half of 2010) to overtake
while growth of Studivz was flat. In Spain, Facebook overtook social networking national leader, Tuenti, in 2010, gaining 10. 5m users compared with the Spanish site's 6. 8m-Facebook's users tripled in a year.
Since start-up XING has used all forms of VC funding, from a business angel in May 2004, to a leading European Venture capitalist with offices in Switzerland, Germany and the UK, for a net total investment of €11. 4m.
Xing website, www. xing. com Economist (2009) A spat among professional networks-Class war-Does local beat global in the professional-networking business?
Fabernovell (2007) XING Best practice social network websites. Interview with founder, download. 74 MARKOFF, J (2007) Move over Silicon valley,
Here Come European Start-ups, NY Times, 24 jan 2007: http://www. nytimes. com/2007/01/24/technology/24munich. html?
CDT website: http://www. cdtltd. co. uk/Tim Minshall, Stuart Seldon, David Probert, Commercializing a disruptive technology based upon University IP through Open Innovation:
Logic, Wall st Journal, 18 jan 2011, http://blogs. wsj. com/tech-europe/2011/01/18/russia-leads-700m-investment-in-plastic-logic/Plastic Logic:
Novaled website and its archives: www. novaled. com USA National Science Foundation,(2010) World Technology Evaluation Center, Inc.,WTEC Pane, Report on European Research and development In Hybrid Flexible
Jimena Almendares, 2010, E-Ink, MIT Technology Review, January/February 2010, http://www. technologyreview. com/business/24245/E Ink website
http://ca. finance. yahoo. com/blogs/insight/kodak-lesson-ending-didn-t-happen-191731960. html Paul Semenza Kodak Exits OLED Business After 30 Years;
) Later, the company adopted Google-like practices with employees encouraged to use"free time"to work on their own ideas to develop prototypes.
Company website: http://www. shadowrobot. com/The cool hand of technology, http://www. forbes. com/2009/08/14/shadow-robot-hand-entrepreneurs-technology-robotics. html
KUKA's website notes that close links between development and manufacturing are a decisive factor for reducing the development times of new products.
In the Realsim project, DLR developed a free Modelica multibody library (the download is available at http://www. Modelica. org/library
KUKA Robotics website, www. KUKA-Robotics. com Rainer Bischoff, 2009, KUKA from research to products, 12 mar 2009, 40th International Symposium on Robotics, KUKA presentation.
R. U. Robots website, www. rurobots. co. uk Robotdalen The Robotdalen innovation programme was set up in 2003.
Robotdalen website, www. robotdalen. se Ulf Westerberg, 2009 The Public sector-one of three collaborating parties, A study of experiences from the VINNVÄXT programme, VINNOVA, Case No:
what business model is likely to be most successful for instance the trend to verticalization in the web services sector from device to operating system to service as a lock in mechanism in a web market. 106 1 The Web Services value chain:
web farms requires the largest capital investment Simon Forge SCF Associates Ltd All rights reserved 2012 1 Deploy,
Integrate, and run on webfarm R&d & IPR (Option) download Apps store R&d, Test, Release Basic web system design and operations setup Integration into commercial web environmentmarketing
Sales & After sales Generic Web Services Value Chain for a large operation (Google, Apple, Amazon,
and display Other major business processes eg logistics systems for item delivery for e-commerce Webfarm Build & Test Distribution Sales & Marketing R&d Manufacture Web Applications
10.2791/13458 Abstract The objective of the study is to document the existence of innovation gaps between the EU and its main competitors in specific ICT sub-sectors namely web services,
Overtext Web Module V3.0 Alpha
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