It has been said that the 21st century will be known as the era of communications. That is because the digital age is expanding opportunities for telecoms and electronics convergence around the world. The global consumer electronics industry is also set to experience phenomenal growth in the near future.
While the global recession took its toll on many information and communications technology (ICT) and electronics businesses, overall these sectors are experiencing an unprecedented revolution in technological developments marked by explosive, market-driven growth in converged services and devices. These advancements are shaping global site selection strategies around the world and involve areas as diverse as energy solutions to 3D TV.
Take IBM, for example. Based on convergence opportunities, this US company announced earlier this year plans to locate its $40m Energy & Utilities Solutions Lab (E&USL) inside the IBM China Development Lab in Beijing. The project will bring together a wide variety of experts across industry lines to make energy and utility networks safer, more efficient and smarter.
"We want to get close to the marketplace so we can work day in and day out with our customers in China," says Dr Matt Wang, vice-president of IBM China Development Lab. "As part of our growth strategy, we strive to become a key part of China's energy and utilities ecosystem, working with the Chinese government, utility companies, solution providers and business partners."
China is one of the largest markets for energy and utilities in the world. The new E&USL is part of IBM's strategy to address the burgeoning demand of smart-grid initiatives in China as well as being an excellent example of value added through the convergence of technologies.
Companies worldwide are looking for opportunities to jump onboard the convergence gravy train. Another case in point is Singapore-based Affle, a mobile media solutions provider. Affle is scaling up its presence in India where it opened offices in Mumbai and Bangalore, and other locations around the world such as Australia and China.
With the mobile media market expanding exponentially across continents, Affle is aggressively looking at making deeper inroads in newer markets and expanding operations in strategically important markets such as India.
Software and IT services, communications and electronics companies are by far pegged as having the highest percentage of investment growth between July 2009 and September 2010, according to fDi Intelligence statistics recorded by fDi Markets in its ICT and electronics industries database. During that time period, software and IT services alone accounted for 1017 of 2384 projects, or 43%.
IBM ranked first, with 52 investment projects, followed by Telefónica (Spain) with 34 investments, Hewlett-Packard (US) also with 34 investments, Verizon Communications (US) with 21 investments and Clearwire (US) with 19 investments.
While Asia remains attractive for inward investment, the US remains first with 623 projects by 396 companies investing there between July 2009 and September 2010, according to fDi Markets.
Deutsche Telekom, as an example, recently expanded its US fourth-generation mobile broadband network in cities across the US. Its coverage is now available to more than 85 million Americans in nearly 50 major metropolitan markets and is expected to expand to 100 metropolitan areas by the end of this year, covering 185 million people.
China is pegged second, with 189 projects by 143 companies. Among them is the July announcement by US-based software provider Novell, which revealed plans to establish a research laboratory in Shenzhen, China, with joint venture partner Chinese internet service portal Tencent. Novell says its goal is to develop an internet data centre (IDC) cloud-computing platform that will promote IDC industry development and help companies improve productivity and reduce costs.
City wise, Singapore was designated as the leading destination, attracting 63 inward investment projects from 55 companies between July 2009 and September 2010. Number two was London with 44 projects from 44 companies, followed by Bangalore with 35 projects from 33 companies and Shanghai with 28 projects from 26 companies.
The US surpassed all countries for the most outward investment projects overseas, with 1022 projects by 551 companies. This represents 43% of all ICT and electronics investment projects between July 2009 and September 2010. The runner-up, Japan, had 153 outward investment projects coming from 62 companies, followed by the UK with 145 projects from 98 companies, Germany with 106 projects from 63 companies and France with 99 projects from 52 companies.
Within Europe, fDi Markets figures show that the UK is the most attractive European country for FDI in the ICT and software sectors. The UK has held that position since 2003. In August, US-based PC software company Hewlett-Packard announced plans to establish an IT centre at its Scottish base in Erskine, Renfrewshire. The location is currently home to HP’s sales and support operations. The expansion calls for some 700 new workers who will establish the centre as a hub for delivering IT services to UK clients. The site already has a sales and customer support presence. The workers will replace the 700 who were transferred to the Czech Republic in 2009.
Among Europe's cities, London is the top destination city, followed by a more distant Paris and even more distant Dublin, Munich and Madrid. According to Paul Bromelow, global sales director of Think London, the city’s FDI agency, there are several factors making London attractive: it is a global banking hub, a centre of intellectual excellence and is one of the world's largest services-driven economies.