Contribution of the IT Industry to Economic Development

1
Contribution of the IT Industry to Economic
Development
The Israel Perspective

• Hanan Achsaf
• President, Motorola Israel Ltd.
• Former President Israel Electronics Association
• Advisor to the Prime Minister Infrastructure
  Communications and Information
• July 16, 1999

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Today we are witnessing the early turbulent days
of a revolution that may prove to surpass all
previous revolutions
The Emerging Digital Economy
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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

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Classifications For New Media Industry

• CommunicationsCommunications facilitiesHousehold
  A/V equipmentTelephone and telegraph
  equipmentBroadcasting and communications
  equipmentRadio and TV broadcasting
• ComputingComputer equipmentSemiconductorsElectr
  ical equipment and suppliesSearch and navigation
  equipment
• ContentNewspapers, Periodicals, Books, Greeting
  cardsAdvertisingBusiness servicesMotion
  picturesLibraries, vocational and schools

Source The Digital Economy, Don Tapscott
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Convergence trends

• Convergence
• telephony
• data
• information/Internet
• broadcasting

• Information Society
• services

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Technologies For The New Economy
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Multimedia Applications
Remote LAN Intranet
Internet applications

• File transfer
• Groupware
• E-mail
• Corporate info

• WWW Browsing
• Video Telephone
• E-mail
• News push
• Networked games
• Electronic commerce

The Future Network
ISDN/PSTN
Video conference
Video terminal

• High-quality tailor-made appl.
• Standard ISDN package

CorporateLAN
Internet
ApplicationServers
Wireless Post Card and Electronic Business Card
InternetServiceProviders

• Multimedia electronic mail

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A View of the Future
The Portable Tool Set
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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
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Technological solution for the Tool Set
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10 Themes Of The New Economy

• Knowledge
• Digitization
• Virtualization
• Molecularization
• Internetworking

• Innovation
• Immediacy
• Globalization
• Discordance
• Convergence

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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
13
Comparison Of Multimedia Output 1996 and 2005
Source The Digital Economy, Don Tapscott
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IT Changing Productivity standards
US Computer Output Per Worker (US terms)
K
Source US Industry and Trade Outlook, 1998.
15
Foreign Employment By Global Companies
(Percent of Total)
Source World Investment Report 1997
16
New Media Industry Job Growth1995-2005
Million of Jobs
Source The Digital Economy, Don Tapscott
17
IT Investment - Top 15 IndustriesIT investment
per worker
Source The emerging digital economy II, June 1999
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Shifts To The Internetworked Government
Source The Digital Economy, Don Tapscott
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Internet is showing the wayinto the new world!
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World Wide Web Users
Traffic on the internet doubles every 100 days
!!!!
Source US Industry and Trade Outlook, 1998
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New Era of Digital Economy

• The Internet - is evolving to an open network
  infrastructure and a unique venue for commercial
  opportunities_at_ Expanded customer base_at_ Cost
  effective delivery channel_at_ Efficient customer
  service

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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.

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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.

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Israel Electronics Industry Profile
M
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 RD
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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
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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
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Total Capital Raised by Year (Million)
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
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Capital Distribution by Industry1998
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Acquisition of Israeli Technology 1998

• Elcint by GE valued _at_ 100M
• WaveAccess by Lucent valued _at_ 56M
• Teledata by ADC valued _at_ 200M
• Memco by Platinum valued _at_ 412M
• Lannet by Lucent valued _at_ 117M
• Class Data by Cisco valued _at_ 50M
• Mirabilis by AOL valued _at_ 407M
• Picture Vision by Kodak

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More acquisition of Israeli Technology 1996 1997

• Armon Networking by Bay Networks _at_ 36M
• Instent by Medtronics _at_ 200M
• Scorpio Com by US Robotics _at_72M
• Orbot by Applied Materials _at_ 100M
• Opal by Applied Materials _at_ 175M
• Biosense by JJ _at_ 400M
• RadNet by Siemens _at_75M

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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 Image processing, Audio,
video E-commerce, E-mail, E-publishing Distance
learning, training
Internet connectivity, multimedia, navigation,
protection, service, telephony Internet Video
Streaming Smart cards Voice and Handwriting
Recognition Wireless LANs Automatic PCB quality
control Bio imaging, bio informatics Bio
sensors, Cardiac imaging Dental diagnostic and
imaging
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Thank You
H.Achsaf_at_Motorola.com