Wednesday 17 February 2010

Why almost nothing revolutionary comes out of Europe

Recently, I overheard this one: "why is it almost nothing revolutionary comes out of Europe?" This question basically expresses a perception that can be explained.

Most tech companies in Europe don't target the world market - they target one country first, and when they dominate that, they invade the next countries. This is the reason why has a huge market share in Germany, and is present in USA, but is totally unknown in Denmark, which borders Germany inside EU.

Many companies dominate their own country, but do not have presence in other countries. Difference in languages, law, culture etc. separate the markets. These companies often either produce something better than the largest international companies, or ends up being destroyed in the competition. Many countries had dominating Word processor app companies, but Microsoft Word killed most of these. In other words, if the local company doesn't make a greater product, it doesn't survive. Therefore, the local population often considers local companies to produce better products than other countries. A good example is, that a typical sink faucets from USA would never have a chance on the Danish market, because we are used to more advanced systems with thermostats etc. To many Danes, it is annoying when the cold-water and the warm-water taps are separate, and to many it is annoying if the shower isn't thermostat-controlled. Also, Danes use more expensive wall sockets for electricity, than Germany or Sweden. This makes a house 0.05% more expensive, but better-looking, and few seem willing to save that money.

There are many revolutionary products from Europe, but they are probably not as highly profiled in English media. Many products are kept out of the U.S. market, for various reasons, and some get a delayed entry. When I recently went into a T-mobile shop in New York, and explained that I was from Europe, the immediate reaction was: "Oh, that's where all the cool Nokia phones are." If the initial launch isn't done in an English-speaking country, it may be old news once it gets to an English language country. In the meantime, a latecomer may have entered (or started in) an English-language market, so that the original inventor looks like the late-comer. In similar ways, products from USA that may be first-movers internationally, sometimes look like late-comers in other markets. Which phone came first? Google Nexus One or HTC Desire? Where I live, it seems that HTC Desire comes first.

You need to read news in other languages than English in order to read about tech from Europe. Microsoft thought that Great Plains would have better software than a company from Europe, but changed their minds, and is now basing their business on European software they didn't understand the power of, until they looked more closely at it.


Yogi Yang said...

I totally agree with you.

Just recently I found about a product called: Bitfram Archiv. Built in Delphi 7!

It is a good document management system but even after so much persuasions from my side they are not ready to release an English version.


Lars D said...

One sale rarely pays off programmer hours. When Gigasoft was still in its infancy, I paid them a lot of money to implement a feature 6 months earlier than their roadmap plan. I think I paid them 10-50 times the amount of money of what their product would cost without that feature.

If you really want the Bitfram product that much, try to offer them a significant amount of money - enough to pay a programmer for a month. If they still say no, try to raise your offer.

RompeTecla said...

I'm a super fan of and their news are really from around the world, from USA, to Europe to Asia.
And is little biased.

Yogi Yang said...

I think you missed my point.

I don't want it. I have never used it because it is in German language and I don't know that dame language.

I only know English and that is it.

In our company we use the open source version of Knowledge Tree for document management.

I don't want to use it. I am persuading them to release in English language as their product has got many good features (I found this out by translating their web site to Eng using Google Language Tools) which even commercial products do not have in spite of charging so heavily.

An English version will increase the reach of the software.

I forgot to mention that it is going to be launched as open source and is developed completely in Delphi 7.

Do check it out:

Lars D said...

@Yogi: I don't know the size of their product or their business model, so I will now try to guess some numbers, as an example of how a company could think, when getting a request like yours.

Let's say that they can internationalize it and localize it to English for $20,000 - that would not be enough for potential customers. Customers want support, English-language homepage, English-language manuals, and maybe even English-language logic in menus etc. Let's assume that the price of that is $50-$100,000. Why should they spend this amount of money? One reason could be, that they earn more than $100,000 in turnover. However, in order to get that, they need customers to know about the product, and ask for it. That requires marketing and selling, and without that, the $100,000 is lost.

In other words, in order to make money on your suggestion, they need to spend more, maybe $200,000 on the project "Make our product available in English". However, if there are competitors in the English-language market, marketing costs may be very expensive, and the $200,000 investment may yield zero earnings. They need a strategy, that makes sure that they earn more money than they spend on advertising, and maybe that requires an investment of $1 million or more, and the outcome may be uncertain.

However, if their main market works well, they may be able to invest $1 million in that market, and get $2 million back.

So, what would you choose? Would you invest $1 million into a new market, not knowing if you would have money left at the end of the year, and not knowing if you would have any significant market share, or would you invest $1 million in your own market, and have $2 million at the end of the year?

It is not important, whether this is Open Source or not. Most customers don't focus on licenses - they care about costs and whether it solves their problems.