Transcript Contribution of IT Industry to Economic Development

Contribution of the IT Industry
to Economic Development
Hanan Achsaf
President, Motorola Israel Ltd.
Former President Israel Electronics Association
Advisor to the Prime Minister Infrastructure
Communications and Information
July 16, 1999
“Today we are witnessing the
early turbulent days of a
revolution that may prove to
surpass all previous
revolutions”
IT Developments
More use of consumer electronics like TV sets,
video recorders, video games, CD players, PCs,
etc.
Computer-based communications, information,
commerce and entertainment services
Internet, Intranet, Extranet usage spreading fast
Globalisation trends and trade increase productivity
and flexibility
People spend more time on the move and want to
communicate and be informed when travelling
Classifications For New Media Industry

Communications
Communications facilities
Household A/V equipment
Telephone and telegraph equipment
Broadcasting and communications equipment
Radio and TV broadcasting

Computing
Computer equipment
Semiconductors
Electrical equipment and supplies
Search and navigation equipment

Content
Newspapers, Periodicals, Books, Greeting cards
Advertising
Business services
Motion pictures
Libraries, vocational and schools
Source: The Digital Economy, Don Tapscott
Convergence trends
Mobility



Convergence
personal
terminal
service




Integration


fixed/mobile
cordless/cellular/
satellite
telephony
data
information/Internet
broadcasting
Information Society

services
Towards the third generation systems
Technologies For The New Economy
Technology
Old Economy
New Economy
Signal
Analog
Digital
Processor
Semiconductor
Microprocessor
Network
Narrow
Bandwidth
Information
Highway
Device
Dumb access
Information
Appliance
Content
Text, Voice,
Image
Multimedia
Networks
Dumb
Intelligent
Multimedia Applications
Video conference
• High-quality voice
• Music
• File transfer
• Groupware
• E-mail
• Corporate info
Internet applications
• WWW Browsing
• Video Telephone
• E-mail
• News push
• Networked games
• Electronic commerce
Voice/Audio
Remote LAN &
Intranet
The Future
Network
ISDN/PSTN
Video terminal
• High-quality tailor-made appl.
• Standard ISDN package
Wireless Post Card and
Electronic Business Card
• Multimedia electronic mail
Corporate
LAN
Internet
Application
Servers
Internet
Service
Providers
A View of the Future
The “Portable Tool Set”
Handwriting
Recognition
Video Conference
Fax,
E-Mail, WWW
Camera
Voice Input
and Output
foldable
Global Mobile Communications Personal Communicator
Enabling Technologies “Portable Tool Set”
PC
Workstation
Video/Still Camera
TV/Web TV
Fax
Copier
Scanner
DVD/CD-ROM
GPS Navigation
Organizer
Cellular/Satellite Link
Answering Machine
Electronic Dictionary
Electronic Translator
Single
Portable Unit
~ $500
Technological solution for the “Tool Set”
40 Years: Transistor Radio
Credit Card Size
10 Years: 1kg Cellular Phone
80g StarTac
10-15 Years ?? “The ToolSet”: 20kg
100-200 g
10 Themes Of The New Economy
 Knowledge
 Innovation
 Digitization
 Immediacy
 Virtualization
 Globalization
 Molecularization
 Discordance
 Internetworking
 Convergence
IT - A Major Engine of Economic
Growth in Industrial Nations
GDP Growth In The US 1995-1998 (Percent)
IT contribute 35% of US economic growth
and accounting for only 8% of GDP
Comparison Of Multimedia
Output 1996 and 2005
Source: The Digital Economy, Don Tapscott
IT Changing Productivity standards
US Computer Output Per Worker ($US terms)
$K
Source: US Industry and Trade Outlook, 1998.
Foreign Employment By Global
Companies
(Percent of Total)
Source: World Investment Report 1997
New Media Industry Job Growth
Million of Jobs
1995-2005
Source: The Digital Economy, Don Tapscott
IT Investment - Top 15 Industries
IT investment per worker
Source: The emerging digital economy II, June 1999
Shifts To The Internetworked
Government
Industrial Age Government
Internetworked
Government
Bureaucratic controls
Client service
Isolated administrative
Integrated services
Paperwork
Electronic services
Time consuming process
Rapid, streamlined response
Manual financial transactions
Electronic transfer of funds
Slow reporting mechanisms
Flexible information inquiry
Source: The Digital Economy, Don Tapscott
Internet is
showing the way
into the new
world!
World Wide Web Users
Traffic on the internet doubles every 100 days !!!!
Source: US Industry and Trade Outlook, 1998
New Era of Digital Economy
 The
Internet - is evolving to an
open network infrastructure and a
unique venue for commercial
opportunities
@ Expanded customer base
@ Cost effective delivery channel
@ Efficient customer service
Huge Increases In Sales Volume

Amazon.com - Went from $16m to $300m in
sales between 1996 and 1998

Cisco systems - Went from $100m to $4Bn in
internet sales over the same period

Dell computers - Went from $1m per day over
the net sales to $6m between Jan 1997- Jan 1998.

Auto-by-tel - Went from $2Bn to over $10Bn in
sale over the net between 1996-1998.
How well Are We Measuring The
Digital Economy ?
 E-Commerce
- Retail sales transactions
are not broken out by method of selling
 Firm/Industry - Not yet developed the
micro data sufficiently outside of
manufacturing
 Prices - New products, services and
ways of selling are yet to be modeled.
$M
Israel Electronics Industry
Profile
1998 Total Revenue - $8.0Bn
Exports - $6.2Bn
47,000 workers are employed in the industry
Sales per employee amount to $172,000
The Israeli electronics industry has 65% added value rate
12% of employees in the electronics industry are engaged in R&D
Israel Electronics
Industry Outlook
$Bn
Accelerated Growth Path
2005 ~ $25 Bn
(17% CAGR)
Current Growth Path
2005 ~ $17 Bn
(11% CAGR)
Total electronics industry revenue is expected to reach $10 billion by 2000
Strong government support for accelerated growth of the industry
Increased emphasis on technological education to close the human resources gap
The Israeli economy will be increasingly technology-based
Israel Start-Up Phenomena
Largest number of start-ups outside of
US
Highest concentration of start-ups
outside Silicon Valley
Expanding volume of venture capital nearly $1.8 billion has been invested
in 300-400 start-ups since 1992
In 1998, $150M of US venture capital
was invested in Israel - more than in
any other country outside the US
Over 100 Israeli companies traded on
U.S. & European exchanges. More
than $1.5 billion raised from
placements in 1998
Total Capital Raised by Year
($Million)
1995 1996 1997
1998
Venture Capital
60
264
626
470
Private Equity
91
110
66
83
Investment
Companies
5
23
20
115
Total
156
397
712
668
Total Capital raised is estimated at $2.87 Billion
An estimated 60% have been invested already
A total of $1.1 Billion is yet to be invested
Capital Distribution by Industry
1998
Acquisition of Israeli Technology
1998
Elcint by GE valued @ $100M
 WaveAccess by Lucent valued @ $56M
 Teledata by ADC valued @ $200M
 Memco by Platinum valued @ $412M
 Lannet by Lucent valued @ $117M
 Class Data by Cisco valued @ $50M
 Mirabilis by AOL valued @ $407M
 Picture Vision by Kodak

More acquisition of Israeli
Technology 1996 & 1997
Armon Networking by Bay Networks @ $36M
 Instent by Medtronics @ $200M
 Scorpio Com by US Robotics @$72M
 Orbot by Applied Materials @ $100M
 Opal by Applied Materials @ $175M
 Biosense by J&J @ $400M
 RadNet by Siemens @$75M

Leading Start-Up Technologies
Data Compression
ADSL,HDSL - wide band com.
Artificial intelligence
Cryptography, security, encryption
Firewall, Compression
Data bases, data mining,
Development tools,
Semiconductor Design, Asic, DSP
Digital imaging, printing
Internet connectivity,
multimedia, navigation,
protection, service, telephony
Internet Video Streaming
Smart cards
Voice and Handwriting
Recognition
Wireless LANs
Automatic PCB quality control
Image processing, Audio, video
Bio imaging, bio informatics
E-commerce, E-mail, E-publishing
Bio sensors, Cardiac imaging
Distance learning, training
Dental diagnostic and imaging
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