Europe’s biggest software clusters no match for Silicon Valley heavyweights

silicon-valleyThe EU has built a core of world class software zones but remains some way from emulating Silicon Valley’s ability to fuse technological innovation with economic success, a Fraunhofer Institute study has found.

According to the EU Software Cluster Benchmark 2013, only five European clusters score top marks for employment, turnover, growth dynamics, human capital, company demographics, and a range of industry-specific factors that mark out successful tech zones.

Interestingly, two of this top five are UK-based; London and Berkshire, Buckinghamshire and Oxfordshire (BBO), with le-de-France, Stockholm and the German Software-Cluster (which carried out the research) rounding out the list.

Of that list, London and the M4 corridor are the clusters with the highest turnover with locations such as le-de-France, Stockholm, Copenhagen, and Warsaw getting special mentions for excellence in certain areas.

Other clusters included Lombardia, Utrecht, Stockholm, Bavaria, Berlin, Madrid, Budapest in Hungary, Prague, and Helsinki.

The problem is that the clusters remain fragmented and competing and none can match the model that still defines such technology zones, Silicon Valley.

“The software sector is a key driver of the competitiveness of the EU and influences the innovation capabilities across all sectors,” said Software-Cluster Strategy Board president and SAP strategic innovation head, Dr. Stephan Fischer.

“However, innovation today is collaborative. In the German Software-Cluster, large and medium-sized software companies together with renowned research institutions have joined their complementary competencies for a couple of years now to develop the foundations for tomorrow’s enterprise sector,” he said.

To have any hope of bridging the gap between Europe’s clusters and Silicon Valley, collaboration and peer learning were key, he believed.

One could take issue with the import of some of this, starting with the way every tech zone of earth is compared to Silicon Valley. Might this now be an out-of-date standard against which to judge success or failure?

One could just as easily point out that no US tech zone has come any nearer to emulating the Valley’s success either and for a good reason; Highway 101 was fuelled for many years during the 1960s and 1970s by vast contracts from the US government and military, a largesse no other zone will ever be able to replicate.

Much like the internet, Silicon Valley has become the shop window of startup capitalism but it is also true that it would never have existed without abundant tax dollars to kick it all off. Europe’s tech clusters will have to get by on a lot less.

“The cluster benchmark clearly shows that we have made tremendous progress in recent years,” said Karl-Heinz Streibich, CEO, Software AG. “However, the results also underline that compared to global standards all European clusters have to catch up. It must be our goal to achieve industrial strength on a global scale in order to remain competitive on the international stage.”

Another way to interpret the same data is to highlight the fact that specific conurbations in certain places dominate technology. For instance, a recent KPMG report found that the UK’s tech centres were exactly where the Cluster Benchmark report pins them, namely London and the M4 corridor.

Within each country, similar concentrations of technological success repeat themselves. But that still leaves large areas of the continent devoid of such zones.

Europeans might one day judge tech industries an economic success on the basis it can create zones in every major city, not just London, Paris and Munich.



Originally published on Techworld.com. Click here to read the original story. Reprinted with permission from IDG.net. Story copyright 2023 International Data Group. All rights reserved.
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