Building Bridges
Much of Davos was devoted to closing the gap between the technology haves and have-nots
BY JENNIFER SCHENKER
FEBRUARY 8, 2001
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Last year the tech titans were the masters of the universe. But the conclusion at this year's World Economic Forum was that there is no new economy[MDASH]just the economy[MDASH]and the tech sector is as vulnerable as any other sector.
The tech sector is, in fact, confronting a long list of woes: share prices of everything from dotcoms to telecoms companies are tanking, capital spending is contracting in the U.S., the skills shortage is worsening and the digital divide is growing. During the forum Hasso Plattner, co-chairman and CEO of German software company SAP, talked about how last year growth rates of 35% were considered normal by fast track tech companies and 100% was considered possible. Today, anywhere from 3% to 5% is considered good, he said.
The stars of the computer industry are also having to learn to live with smaller gains. During an interview at Davos, Compaq chairman and CEO Michael Capellas forecast flat earnings for his company during the first quarter, although he expects things to get back on track in the second half of the year. He and other tech leaders bemoaned the short term orientation of the market. "The preoccupation with minute changes is unhealthy," said Capellas. "Often the crime and punishment don't match."
Even those involved in the booming mobile sector and Internet infrastructure buildout are suffering. While industry leaders were meeting in Davos Ericsson announced that it will farm out production to better control costs and Nokia, the number one maker of mobile phones, warned that the entire industry would fall below estimates this year.
In this "back to reality" climate, Cisco Chairman John Chambers chose Davos as a forum to warn investors to take a more conservative view of his company's outlook for the next six months[MDASH]possibly trying to reduce the impact of Cisco's first poor quarterly report in years, which came the week after the conference. Yet Chambers and Masood Jabbar, president of Sun computer systems, said in separate interviews at Davos that despite the economic downturn the demand for Internet infrastructure buildout will remain strong. The tech industry needs to look at the digital divide as a "digital opportunity," says Sun's Jabbar. Within three years there will be two million IT jobs in Europe and North America that cannot be filled, he said. Investment in education and technology in the developing world will pay off because then "work can go to people rather than people going to work."
Immigration issues in places like Germany will disappear because computer programmers and other types of skilled IT workers will be able to stay in their home country even if they are completing jobs for companies in the developed world, Jabbar predicts. But, unlike in the past, when the developing world was regarded as a good place to get cheap labor, Jabbar says he believes open bidding for talent over the Internet will lead to an equalization of wages.
For his part, Chambers is telling government leaders that they have no choice but to build out Internet infrastructure. His argument is that there is a direct correlation between Internet buildout and productivity increases. With a productivity gain of 5% a country's standard of living can double in 15 years. A slower Internet buildout, leading to a 1% productivity gain, would require 70 years for the standard of living to double, he says.
But can the tech sector reap profits by helping to bridge the digital divide? Carly Fiorina, chairperson and CEO of Hewlett-Packard, is convinced that the answer is yes. She has launched [XREF "http://www.hp.com/e-inclusion/" "World e-Inclusion"], a program under which HP and its partners sell, lease or donate products and services worth $1 billion to governments, development agencies and non-profit groups in developing countries. An initiative announced at Davos with African musician Youssou N'Dour and phone company Sonatel to create local Internet clubs in Senegal, which will provide training, education, financial and health services as well as telemedicine, is part of that effort.
Other companies are looking to different ways of kick-starting the process. John Gage, chief researcher and director of the science office at Sun Microsystems, met at the forum with Sony Chairman Nobuyuki Idei to ask for help in getting 100 million game devices equipped with browsers out to remote villages in poor countries. Gage has made a similar plea to Toshiba and Nintendo. The idea is that once linked to televisions these game boxes would act as a window to the world, bringing not only Internet access and educational material to students but health, crop and pricing information to their parents at a price per unit far cheaper than personal computers.
During the Davos forum Gage also met with Brazilian media mogul Roberto Civita, chairman of the Abril Group, about developing online Portuguese language educational material which could eventually be shared with students in Mozambique, with the owner of an independent television station in Pristina about using the station's repeaters to get Internet access out to remote areas of Kosovo, and with the Palestinian Authority about wiring up schools there.
Tech industry leaders also took part in a joint meeting of a United Nations task force set up to work on the digital divide issue and a group from the G-8 group of industrialized nations called the [XREF "http://www.g8kyushu-okinawa.go.jp/e/genoa/index.html#1" "G8 dotforce"]. The idea is to bring all the players to the table and define the business and regulatory models needed to close the digital divide. "This is an unprecedented effort to get all the groups to the same table," said meeting attendee Zoe Baird, president of the Markle Foundation, a U.S. based group that aims to donate up to $100 million to information technology projects that improve peoples lives.
Bruno Lanvin, a World Bank executive who is now the executive secretary to the G8 dotforce, says he is convinced that technology can help transform the lives of people in the developing world. "We have gone beyond the question of penicillin or Pentiums[MDASH]information technology is so powerful a tool that you almost can't deal with the crucial issues of education, health and environment without it," he said during an interview at Davos. "If it stays a question of either-or we might end up with neither-nor." If tech companies can create a sustainable business model around products and services that raise the standard of living for the world's poor they will not only shrink the digital divide but their own list of woes.
MAIN PAGE 
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Much of Davos was devoted to closing the gap between the technology haves and have-nots
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