Corporate R&D The Case of ICT Companies

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1 ICT in Europe: a socio-economic approach January Corporate R&D The Case of ICT Companies Main results from The 2010 Report on R&D in ICT in the European Union Paul Desruelle Institute for Prospective Technological Studies (IPTS) EU Science Journalists Association (EUSJA) visit ICT in Europe: a socio-economic approach Seville, January 2011

2 Content ICT in Europe: a socio-economic approach January PREDICT: Prospective insights on R&D in ICT Importance of the ICT sector in the EU Member States share of ICT Business Expenditure in R&D (BERD) in the EU Evolution of BERD by ICT sub-sectors ICT Company data International trends by ICT sub-sectors The Computer Services and Software sub-sector R&D/Sales by ICT sub-sectors Main conclusions

3 PREDICT: Prospective insights on R&D in ICT ICT in Europe: a socio-economic approach January Why? Importance of R&D for economic growth Europe lagging the 3% target 2% BERD/GDP, from circa 1.2% Importance of ICT (sector) for R&D, innovation and economic growth Lack of systematic mapping of EU ICT R&D What? IPTS research project co- financed by JRC-IPTS and DG Information Society & Media (DG INFSO) Mapping and analysis of R&D investments in the EU ICT sector. Series of reports (2008, 2009, 2010, 2011) Project to continue until (at least) 2015 How? Combines three complementary perspectives: National statistics - private and public R&D expenditures Company data (EU industrial R&D investment Scoreboard) Patent data (EPO) and R&D center locations Latest available official statistics delivered by Member States, Eurostat and the OECD 2010 report (published 05/2010) based on 2007 data (2006 for Patents)

4 Importance of ICT sector in the EU ICT in Europe: a socio-economic approach January % of GDP ( 540 billion) 3% of employment in the EU (6.1 million) 25% of business R&D (BERD, 34 bn) ICT 25,0% Pharmaceutical and biotechnology 13,3% Automotive 16,0% Machinery and equipment 8,0% Other sectors 32,0% Aerospace 5,6%

5 The ICT sector ICT in Europe: a socio-economic approach January ICT Manufacturing IT Equipment (NACE 30): e.g. computers, printers, scanners, photocopiers IT Components, Telecom and Multimedia Equipment (NACE 32): Components (32.1) e.g. semiconductors, displays Telecom Equipment (32.2) e.g. network equipment Multimedia Equipment (32.3): e.g. mobile phones, TVs Measurement Instruments (NACE 33): Electronic measurement instruments (33.1 e.g. sensors, readers), excluding industrial process control equipment. ICT Services Telecom services (NACE 64, including also posts) Telecommunication services (64.2) Computer Services and Software (NACE 72) (consultancy, software, web services) Does not cover ICT-related activities embedded in other sectors of the economy, (e.g., in automotive or aeronautics)

6 Member States share of ICT BERD ICT in Europe: a socio-economic approach January Portugal Netherlands 0,88% Luxembourg 4,64% 0,11% Italy 5,59% Ireland 1,68% Greece 0,43% Germany 25,93% Spain 4,14% France 16,68% Sweden 8,26% UK 14,67% Finland 7,21% Germany, France & UK: more than half EU ICT R&D EU % Austria 2,60% Belgium 2,27% Denmark 2,41% Followed by Sweden and Finland Slovenia 0,19% New Member States still very small share Bulgaria 0,07% Cyprus 0,02% Czech Republic 1,06% Estonia 0,13% Malta 0,04% Poland 0,34% Romania 0,19% Hungary 0,33% Latvia 0,01% Lithuania 0,05% Slovak Republic 0,05%

7 Evolution by ICT Sub-sectors ICT in Europe: a socio-economic approach January Real growth of ICT Business Expenditures in R&D (ICT BERD) in the EU ( ) Computer Services and Software is the only subsector with persistent R&D growth

8 ICT Company data ICT in Europe: a socio-economic approach January EU Industrial Scoreboard data: 453 top R&D investing ICT companies worldwide (above 24 M/year): 231 USA 81 EU 52 Japan 89 Rest of the World (RoW) bn - 31 bn 27.6 bn ICT EU Japan RoW US European ICT companies have (as a whole) lower amount of R&D investment than US companies

9 International trends by ICT sub-sectors ICT in Europe: a socio-economic approach January EU Japan RoW US EU Japan RoW US EU Japan RoW US EU Japan RoW US EU Japan RoW US EU Japan RoW US IT components Computer services and software Telecom equipment IT equipment Multimedia equipment EU weak in all sub-sectors apart from Telecom Telecom services US is pulling ahead, not the least in the fast growing Computer Services and Software (CSS) sub-sector

10 Looking at the CSS sector ICT in Europe: a socio-economic approach January EU Japan RoW US RoW US EU RoW US Computer services Internet Software Growth in large Software industry and smaller Internet industry in the US

11 Top 10 R&D investors in CSS sector ICT in Europe: a socio-economic approach January Company US R&D Exp ( M) Age Cy Young US Internet firms, with very large R&D investments EU R&D Exp ( M) Age Microsoft 5, SAP 1, IBM 3, Dassault Syst Oracle 1, UBIsoft Google 1, Amdocs Yahoo! Sage Symantec Fujitsu-Siemens CA Indra Adobe Business Obj Intuit Symbian Cadence Misys Systems Total 15,829 Total 2,931

12 R&D/Sales by ICT sub-sector ICT in Europe: a socio-economic approach January R&D/ Sales EU and US firms equally R&D intensive

13 Main conclusions ICT in Europe: a socio-economic approach January ICT is a leading R&D investing sector Computer Services and Software (CSS) is only ICT subsector with persistent growth in R&D Europe lagging behind its main competitors in terms of R&D investments Weakness in all non-telecom segments, including growing ones This lag is largely due to the size and dynamics of European ICT industry 2010 Digital Agenda for Europe calls for doubling total public and private ICT R&D expenditures in the EU by 2020

14 ICT in Europe: a socio-economic approach January Thank you! Full analysis available at: PREDICT report to be published by May 2011

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