|
The UK has a unique position as
one of the world’s most innovative and receptive markets for information
communications technology. The country has some of Europe’s most voracious
consumers of technology, spending an estimated £118.1 billion (€134.7 billion)
on ICT products and services in 2009, according to the European Information
Technology Observatory.
The ICT sector contributes around 10 per cent of the UK’s gross domestic
product, directly employs over 1 million people and has proven resilient in the
face of the economic downturn.
Some of the world’s largest telecommunications and media companies are pushing
forward the boundaries of technology in the UK. The BBC’s iPlayer service, for
example, is setting the standard for video over the internet, while telecoms
operator BT and cable company Virgin Media, are investing substantial sums in
high-speed broadband access.
Many tech companies are attracted to the UK by this pioneering work, creating
ecosystems of skills and suppliers. The UK is at the heart of a convergence
crossroads: television, telephony, music are migrating online, while internet
access itself is increasingly over mobile phones, or even the set-top box.
The government’s Digital Britain strategy, announced in June 2009, which
promises funding for projects such as universal broadband internet access is set
to solidify the UK’s position as a test-bed and early adopter market for
technology.
Media and telecoms convergence
sets the UK apart
The UK government has committed to
providing high speed broadband access of at least 2 megabits per second (Mbps)
to every household by 2012, one of the most ambitious digital inclusion
programmes anywhere in the world.
|
|
The UK’s creative industries punch well above their weight. One in ten album
sales in the US market are by British artists, while one third of television
format sales around the world originate with British production companies. The
UK is also home to some of the world’s largest and most innovative advertising
agencies.
This mixture of creative and technical expertise on offer in the UK has
attracted many internet companies. China’s Alibaba.com, the world’s largest
online trading site, for example, recently established its European headquarters
in London.
“The UK is one of our strategically significant markets,” said Maggie Choo,
managing director of Alibaba’s European business.
US-based Gorilla Nation, the world’s largest online advertising sales
representation company also set up operations in London’s Soho in 2009. Google,
the internet search company, has large offices in London and has based its main
mobile phone research team in the UK. InterActive Corp, the US-based internet
company, has big international operations for its websites Ask.com, Match.com
and ServiceMagic in the UK.
“The ecosystems you find in London make it very easy to set up and grow
companies. Other internet companies, media agencies and the talent pool is
here,” said Cesar Mascaraque, European managing director of Ask.com.
“You have companies like Skype and Last.fm that have made a lot of money. It is
a snowball effect. Once you have a few companies in an area, it attracts others.
London has that,” Mr Mascaraque said.
For creative and media executives, the lifestyle attractions of the UK are also
important.
“The English language is a big factor. It is a common language across the world,
and London is a great place to live. It is very cosmopolitan, there are lots of
things to do and you are only two hours flight from most places in Europe,” Mr
Mascaraque added.
Telecoms – digital inclusion
creates opportunities
Brits love communications devices.
The UK telecoms market is estimated to be worth nearly £51.7 billion (€59
billion) in 2009, and a study by Ofcom showed that during the recession UK
consumers were more likely to economise on nights out, holidays and DIY than
give up their phone, broadband line or pay-TV. There are around 70 million
mobile subscriptions in the country – more than one for each of its 61 million
citizens.
The government’s Digital Britain strategy will create huge new opportunities for
telecoms companies. Around 2.75 million homes, which currently do not have
access to high-speed broadband internet services, will have to be brought up to
speed. A report by the Information, Technology and Innovation Foundation,
suggested that a £15 billion investment in ICT infrastructure would create
700,000 jobs, around half of which would be in small businesses.
In the satellite space, for example, Avanti, a UK-based satellite start-up is
expecting to win business providing broadband connections to many areas where it
is impractical to run telephone lines or set up mobile phone masts. The company
is planning to launch several satellites to serve the UK’s broadband needs.
“Government has realised that if telecoms is regarded as critical national
infrastructure, the only way to guarantee service availability and back up to
every location in the land is satellite,” said David Williams, chief executive
of Avanti.
Virgin Media, the cable operator, has recently started offering a 50 megabit per
second broadband service to some of its customers, and it is trialling a 200mbps
product. BT is investing £1.5 billion in bringing super-fast broadband to up to
10 million homes in the UK by 2012. In 2009 the government set up a £100 million
project to provide superfast broadband to Yorkshire, which will serve as a
test-bed for the potential of innovation from such services.
A number of foreign companies have set up operations in the UK specifically to
participate in these sweeping telecoms projects. Huawei, the Chinese
telecommunications equipment maker, for example, has been in the UK since 2001,
and operates its European headquarters out of Basingstoke. It provides optical
transmission products for the BT broadband expansion plan.
Similarly Tech Mahindra, the Indian outsourcing company, created a new 500-staff
call-centre facility in South Tyneside, North East England in 2008, in order to
provide services to BT.
The 2012 London Olympics will also provide opportunities for technology
companies. They will be the most digital Olympics to date, with plans for
ticketing via mobile phone, for example. |
|
Software – business
intelligence and games
The software industry has a strong
foundation in the UK and continues to grow steadily, with Ovum, the research
group, estimating that it will be worth around £6.44 billion by the end of the
decade. Although the impact of the economic downturn has been mixed in this
sector, certain segments such as games, security and business intelligence have
performed above industry averages.
Software is the leading sector in
the UK for inward investment, accounting for around 17.5 per cent of all direct
foreign investment in 2008/9. Large government projects, such as the reform of
the National Health Service technology and the financial services sector have
created a large market for software.
The UK’s software successes include Autonomy, the search software company, which
helps big corporations search and categorise unstructured data, such as emails,
photos, phone conversations and word processing documents. Banks worried about
litigation related to credit-crunch losses have rushed to install the software
to discover rogue trader activity. Autonomy software was used, for example, by
Société Générale to investigate rogue trader Jérôme Kerviel. The technology is
becoming a de facto standard with a number of other companies designing software
around it.
Despite the banking crisis, financial software companies such as Misys and
Fidessa have continued to grow. Fidessa had underlying growth of around 19 per
cent in the first half of 2009.
Chris Aspinall, chief executive of Fidessa, says the company’s presence in
London is essential in building up strong relationships with clients. The
company also benefits from the strong engineering skills on offer in the
country.
|
 |
|
“The UK has a very good reputation across the world. We’ve always been quite
innovative in our engineering,” Mr Aspinall said.
The talent pool also attracted Microsoft, which opened a search technology
research centre in London in 2009, its largest such facility in Europe.
“The UK search market represents about 30 per cent of the European market so
it’s definitely the most important territory. Another key factor is the
availability of top talent…some of Europe’s leading universities are here in
London,” said Jordi Ribas, general manager of Microsoft’s European search
technology centres.
Games software too, is an area where the UK has long outperformed, thanks to a
strong culture of creative, independent developers, going back to the 1980s.
Lara Croft:Tomb Raider, Grand Theft Auto and Little Big Planet, were all
developed in the UK. The games market is estimated to be worth around £2 billion
in the UK.
In recent years the UK has lost talent to places like Canada, which offer games
developers very lucrative tax breaks. However, the government is looking at
redressing this balance by putting in place a tax-credit system similar to the
one it offers the film industry.
“[A] key factor is the
availability of top talent…some of Europe’s leading universities are here in
London.”
Jordi Ribas, general manager, Microsoft’s European search technology centres
Electronics: portable devices
and optoelectronics
The UK has one of Europe’s largest consumer electronics markets; second only to
Germany and worth an estimated £10.35 billion (€11.8 billion) in 2009. The
country’s particular design strengths are in optoelectronics and technologies
related to portable consumer devices such as mobile phones.
|
Chips designed by Cambridge-based
Arm, for example, are used in more than 95 per cent of mobile phones sold
around the world. Arm chips are designed for maximum power efficiency and
as concerns about power usage grow, they may start to make inroads into
the broader computer industry.
Cambridge has a cluster of
companies around wireless technologies, including CSR, maker of Bluetooth
wireless chips, which leverages the talent and research coming out of
Cambridge University.
Plastic Logic, a company making plastic electronics, used, for example, in
the screens of e-books, is another Cambridge success story. The company’s
technology is based on breakthroughs in materials engineering at Cambridge
University's physics department over the past 20 years.
The South West around Bristol has its own cluster of semiconductor
engineering companies. This is the legacy of Inmos, a government-backed
chip company set up in the 1970s aimed at rivalling Intel. The company
imploded, but the expertise has remained. STMicroelectronics, the
French/Italian semiconductor manufacturer and Panasonic of Japan both have
data centres in the region.
|
 |
“There is fantastic access to
wireless chip technology in the Bristol area,” said Stan Boland, chief executive
of Icera, a Bristol-based start-up company making mobile broadband technology.
Icera, which has raised a total of $230 million from venture capital investors,
is starting to win business with a number of customers like Nokia.
“We needed a full custom micro processor design. That kind of skill is extremely
rare, but in Bristol you can find people with that kind of skillset,” he said.
PicoChip is another Bristol-based company, which makes modems for imax base
stations and femtocells, which make it easier to use mobile phones in the home.
Both Icera and Picochip are expected to see sales of their technology increase
as high-speed internet services over mobile phones grow in popularity.
Southampton University’s Optoelectronics Research Centre, led by David Payne,
meanwhile, has transformed the modern internet with its breakthroughs in fibre-optic
cable.
Research and funding
The UK is committed to maintaining
a strong science and research base, and spent £3.5 billion on funding science
education in 2008/9, rising to £4 billion in 2010/11. The Engineering and
Physical Sciences Research Council (EPSRC) invests more than £740 million a year
in research and postgraduate training.
Low-carbon technologies are getting particular government support, with £405
million allocated in the 2009 budget to support such technologies. The
low-carbon sector is becoming an increasingly important in the UK. It is
expected to grow by £45 billion to £150 billion by 2015, employing 1 million
people.
The UK has several schemes in place particularly to help smaller ICT companies.
It recently set up a £1 billion venture capital fund – the UK Innovation
Investment Fund – which will help bolster venture capital funding for technology
companies. The research and development tax scheme, meanwhile, allows smaller
companies to claim back up to 175 per cent of qualifying R&D costs, a measure
which has proven very popular. Over 36,000 claims had been made by 2006-07, with
over £2.8 billion of relief claimed.
The UK Technology Strategy Board (TSB) has been instrumental in providing
finance for many of the smallest businesses, stepping in particularly in the
last year when bank finance has been difficult to obtain.
Hypertag, a near-field mobile communications company, for example received a
£517,000 grant from the TSB to set up a project to provide mobile phone
advertising at UK airports.
“The TSB wants the UK to remain at the centre of media buying and to keep the
media industry at the forefront of planning and buying, so it is helping fund
systems like these that can be used by media brands,” said Jonathan Morgan,
managing director of HyperTag.
Tapping the research of world-leading universities is another draw for many of
the companies setting up operations in the UK.
“We do a lot of collaboration with universities. We recognise that big companies
like Intel are not the source of radical innovation,” said Intel’s Mr Graylish.
Intel was one of the early investors in CSR, the maker of wireless Bluetooth
chips, which emerged from research at Cambridge University.
Nokia, the mobile phone maker, is also doing materials research with Cambridge
University, aimed at producing new kinds of handsets. HP has a 160-employee
research centre in Bristol, while Microsoft has run a 100-employee facility near
Cambridge for more than 10 years. IBM has had a research lab in Hursley, South
East England, for more than 50.
An interesting industry-wide collaboration is an initiative known as the Mobile
Virtual Centre of Excellence, which has been running since 1996. For a
membership fee of around £45,000 a year, the participating mobile phone
companies get early access to cutting edge university research. Some of the
early work on Vodafone’s GPRS mobile phone network roll-out came from this
collaboration. One of the current research programmes is “Green Radio”, which
aims to reduce the energy requirements of high-speed mobile data networks
100-fold.
“In today’s era not many companies can afford to do a substantial volume of
real, long-term research,” said Walter Tuttlebee, executive director of the
Mobile VCE. “There is recognition of the academic standards of UK universities,
particularly in the research field.
Highly-regarded university research, together with world-leading telecoms and
media companies, such as BT, the BBC and British Sky Broadcasting, have pushed
the boundaries of technology in the UK and created a deep level of expertise.
At the same time, UK consumers and businesses are a receptive and adventurous
audience for ICT. They have been among the first to embrace IT outsourcing, and
are the leading market for all kinds of consumer electronics, from games
consoles to music players. The UK is often a place where new products and new
business models are first launched, because the country is such an effective
test-bed for technology.
These factors make the UK a unique market for ICT companies. This is why, when
companies like China’s Alibaba begin their international expansion, they come to
the UK. And when internet entrepreneurs like Skype’s Niklas Zennstrom and Janus
Friis have made their millions and have the world at their feet, they choose to
stay.
UK SECTOR REPORT by Maija Palmer
CONTACTS:
British Computer Society
Tel: +44-(0)1793-417424
www.bcs.org
Cambridge Network
Tel +44-(0)1223-401580
www.cambridgenetwork.co.uk
Cambridge Wireless
Tel: +44-(0)1223-422365
www.cambridgewireless.co.uk
Cavendish Laboratory
Tel: +44(0)1223-337200
www.phy.cam.ac.uk
Data Storage Network
Tel: +44-(0)1392-263614
www.projects.ex.ac.uk/dsn
Electronics Leadership Council
www.electronicsleadershipcouncil.org
The Entertainment and Leisure Software Publishers Association
Tel: +44-(0)20-7534-0580
www.elspa.com
e-Skills UK
Tel: +44-(0)20-7963 8920
www.e-skills.com
Intellect
Tel: +44-(0)20-7331 2000
www.intellectuk.org
JEMI UK Ltd
(Joint Equipment and Materials Initiative)
Tel: +44-(0)131-650-7815
www.jemiuk.com
Mobile Virtual Centre of Excellence
Tel: +44-(0)1256-316590
www.mobilevce.com
Momentum
Tel: +44-(0)28-9045-0101
www.momentumni.org
National Microelectronics Institute (NMI)
Tel: +44-(0)1506-401210
www.nmi.org.uk
North of England Microelectronics Institute (NEMI)
Tel: +44-(0)191-293-7000
www.nemi-cai.co.uk
Ofcom
Tel: +44-(0)20-7981-3000
www.ofcom.org.uk
Photonics Cluster (UK)
Tel: +44-(0)121-260-6020
www.photonicscluster-uk.org
Scottish Optoelectronics Association
Tel: +44-(0)1506-497228
www.optoelectronics.org.uk
SETSquared Partnership
www.setsquaredpartnership.co.uk
Technology Strategy Board
Tel: +44-(0)1793-442700
www.innovateuk.org
TIGA
Tel: +44-(0)845-094 1095
www.tiga.org
UK Consortium for Photonics and Optics
Tel: +44-(0)20-8144 0680
www.ukcpo.net
Welsh Opto-Electronics Forum
Tel: +44-(0)1745-535100
www.wof.org.uk |
