Spinoffs

One indication that ESPRIT is having a durable impact on telematics in Europe is that a number of additional projects have begun as a direct result of contacts and cooperation established in ESPRIT. Indeed, RACE is a follow-on to ESPRIT. But ESPRIT also spun off other ventures that did not belong to any EEC or intergovernmental program.

In the spring of 1983 Bull, ICL, and Siemens began discussing the possibility of creating a joint laboratory for R&D on advanced computing. The idea was initially launched by Jacques Stern, president of Bull.^[211] By September the three companies had agreed on a joint research center to focus on precompetitive R&D with full sharing of the results but no joint product development.^[212] The European Computer Research Center (ECRC) officially came into being in January 1984. The ECRC has its own facilities outside of Munich and a staff of fifty full-time researchers. Its projects divide into four groups: computer languages, knowledge-based systems (expert systems), person/machine interaction, and symbolic computer architectures

[211] Guy de Jonquieres and Paul Betts, "European Computer Makers Plan Joint Research," Financial Times, 22 March 1983, p. 44.

[212] Guy de Jonquieres, "European Alliance in Computer Research," Financial Times, 2 September 1983, p. 34.

(as opposed to math-based architectures).^[213] Executives at both Bull and Siemens traced the joint research center directly to ESPRIT and the increased contacts among the Twelve that it brought about.^[214]

Another example of an ESPRIT spinoff is the merger of SGS Microelettronica (the semiconductor division of the state telecommunications company, Societa Finanziaria Telefonica, or STET) and the commercial semiconductor division of Thomson. The new SGS-Thomson, announced in April 1987, would be Europe's second largest producer of ICs, after Philips.^[215] Thomson had been one of France's national champions in electronics, and its marriage to SGS signaled how far France had retreated from its ambitions for national autonomy in the filière électronique . An executive at Thomson told me before the merger was publicly finalized that he was absolutely certain that it came about as a result of ESPRIT interactions.^[216]

Of greater significance than the industrial spinoffs of ESPRIT has been the acceleration of European standardization. Of course, a large share of ESPRIT projects addresses IT standards, and common specifications for future telecommunications systems have been a primary theme of RACE. But a handful of efforts to promote European standards in data-processing and computer networking have sprung up outside the EC programs. The first of these was the Standards Promotion and Application Group (SPAG). The group included the same twelve telematics giants that had begun meeting in the Commission's Roundtables in early 1982. The mobilizing initiative came from France's Bull. Stern, the new president of Bull, appointed by the Mitterrand government in 1982, was personally committed to European standardization for the computer industry. His goal was European adoption of the Open Systems Interconnection (OSI) standards for allowing computers of different makes to communicate and share programs and files. The OSI standards were (and are) being progressively defined by the ISO. Thus, Bull officials organized the first meeting of what became the SPAG group

[213] Paul Tate, "Picking Up Speed," 64.

[214] Interviews 18 and 45.

[215] John Tagliabue, "Europe Joins Semiconductor Battle," International Herald Tribune, 12 May 1987, p. 19.

[216] Interview 37.

in November 1982. One executive closely associated with the process at Bull said that SPAG was inspired in its origins by ESPRIT.^[217] SPAG officially came into being in March 1983, with encouragement from the Commission. The group called on national governments to require conformance to OSI standards in public procurement.

At bottom SPAG was an effort to combat the domination of IBM. IBM had its own proprietary standard—Systems Network Architecture (SNA)—for linking computers. OSI would, its backers hoped, open the market by assuring customers that they could buy from any maker equipment compatible with any other machines. European firms hypothesized that many users bought IBM equipment so as to ensure that it would run on SNA with their previous IBM purchases. Thus, SPAG made specific proposals for European standards (based on the ISO models) in such areas as packet-switched data networks and message handling to European standardization bodies (Comité Européen de Normalisation, Comité Européen de Normalisation Électronique, and CEPT). SPAG submissions have been accepted as the basis for future standards work in Europe.^[218]

SPAG efforts have generated other results. The British government announced in mid-1984 that it would start requiring that computers purchased by the government conform to OSI standards. In September 1984 IBM Europe announced that it would start developing products based on OSI.^[219] After these initial victories part of the SPAG group created a joint company, SPAG Services S.A., in October 1986.^[220] Based in Brussels, with an initial budget of 2.4 MECU per year, SPAG Services offers test facilities for verifying compliance with European standards. It therefore supports and demonstrates the interconnectability of European IT products.^[221]

[217] Robert T. Gallagher, "Stern Spells Europe's Future O-S-I, Not I-B-M," 43; Interview 18.

[218] Eric Le Boucher, "L'Europe Informatique," Le Monde, 16 March 1984, p. 1; Herbert Donner, "The OSI World, Seen from SPAG Europe." Donner was chairman of SPAG Services S.A.

[219] Richard L. Hudson, "IBM Europe Backs a Computer Language Pushed by Its Rivals," Wall Street Journal, 2 May 1986, p. 1.

[220] The initial shareholders were Bull, ICL, Nixdorf, Olivetti, Philips, Siemens, STET, and Thomson.

[221] Jean-Jacques Chiquelin, "L'Informatique Européenne Rentre dans la Norme," Liberation, 3 October 1986, p. 12; Donner, "The OSI World."

The second major standards initiative in IT addressed the operating system for computers. The operating system is the set of internal instructions in a computer that manages the flow of information within the machine and the execution of programs. This time the initiative came in 1984 from Robb Wilmot, then of Britain's ICL. The initial discussion involved five of Europe's computer makers (all of them Roundtable companies). An ICL executive informed me that the process of proposing the group to other partners was greatly eased by the technical contacts created in ESPRIT.^[222] In February 1985 six firms (Bull, ICL, Nixdorf, Olivetti, Philips, and Siemens) announced the formation of the Open Group for Unix Systems. The objective of the group was to encourage the use of the Unix operating system developed by AT&T's Bell Labs, and it later became known as the X/Open Group.^[223]

Again, the idea was to create an alternative to SNA. The thinking was that if a large group of computer makers committed to Unix, it would open the market for their products. First, software writers would be more willing to write programs that could be used on a variety of makes of computer. Second, buyers would be more willing to buy the computers knowing that a large body of software was available to run on them. In addition any programs written to conform to Unix would be operable on any machine built to the standard. Unix would provide operating systems for the fast-growing minicomputer and personal-computer markets.

In time, other makers joined X/Open, including Ericsson of Sweden and the European subsidiaries of DEC and Sperry of the United States. The X/Open Group has produced a manual that provides software producers with guidelines for writing programs according to the Unix applications environment. Initial victories came as some governments (France, the Netherlands, and Sweden) established Unix as a national standard, requiring it for public procurement orders. Significantly, IBM announced that it would offer a version of the Unix operating system on equipment ranging from personal computers to mainframes. A battle over which version of Unix would become the standard has since emerged in the United States, but X/Open agreed on the System V version. The Commission later

[222] Interview 5.

[223] "Six Constructeurs Européens Choisissent un Logiciel d'ATT," Le Monde, 19 February 1985; Europolitique, 20 February 1985; Robert T. Gallagher, "Europeans Are Counting on Unix to Fight IBM," 121.

granted an exemption to the X/Open Group from the EC ban on agreements among firms because any standards produced by the group would be published and would therefore not distort competition.^[224]

These spinoffs provide tentative indications that ESPRIT is changing the way the telematics industries are organized and do business in Europe. At a minimum the collaborative programs have accelerated developments that would have occurred anyway but probably only after further delays and footdragging. ESPRIT provided an organizational structure in which the proper contacts could be made and a consensus could be fashioned. Prior to ESPRIT European firms sought out American companies for technology partnerships. Because of ESPRIT European companies now seek out European partners. In fact, Cadiou, the Commission's director of the ESPRIT program, pointed out that in 1983 (the year before ESPRIT was launched) there were thirty-two alliances linking European to American firms compared with only six between European firms. In 1986 forty-six intra-European linkups almost matched the forty-nine created with U.S. companies.^[225] In addition, although European standards would likely have emerged in time, there is no doubt that ESPRIT hastened the process.