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An American (Company) in Paris

Simon Moores interviews Microsoft European CEO, Jean Philippe Courtois, for The Observer on Sunday.

Being an American in Paris, and indeed in the rest of Europe, these days isn't what it used to be for US companies.

One consequence of the friction with Europe over the war with Iraq is that wrapping yourself in the stars and stripes no longer affords a competitive advantage. And the expansion of the European Union means it's increasingly important to brandish European credentials.

For big, brash Microsoft, the 'apple pie' of the American software industry, one would think the problem would be particularly acute.

The company's chief executive officer for Europe, Middle East and Africa, is a Frenchman, Jean-Philippe Courtois. Of Microsoft's 50,000 workforce, only 12,000 (22 per cent) work for Courtois in Europe. In contrast with other leading technology companies, such as Hewlett Packard, Unisys and IBM, Microsoft's development workforce remains visibly North American.

But despite the recent strains in US-European relations, says Courtois, 'nothing has changed in the way in which Microsoft sees Europe. Microsoft has been in Europe for 20 years and the company's internal perception of Europe has not altered, although we certainly recognise and respect the existence of a distinct European space on a range of issues,' he adds.

'In fact, we see ourselves as a true European partner, in helping Governments, businesses and communities in Europe to solve their technology problems.'

Courtois concedes that, in contrast with other companies, Microsoft's European presence is proportionally smaller but he insists that the company's employment footprint is many times larger in terms of the jobs that Microsoft's presence generates in Europe. Unlike other well known computer companies that employ a vertical services model, Microsoft works largely through partnership with local businesses. Consequently, Courtois claims that for every Microsoft job created in Europe, seven more are created in the local economy, which makes Microsoft unique as an employment generator in the European IT market.

Microsoft has built a facility in Ireland to localise European-language versions of its software, has its research laboratories in Cambridge and a third facility in Aachen.

'It is important to be a truly local partner here,' says Courtois. 'For Microsoft, that means having European substance as well as European style. Making our software and solutions available in European languages while attempting to set an example that has Microsoft in Belgium, France, Germany, Ireland, Turkey, Portugal, South Africa and UK winning awards as the top company to work for and among the top 10 employers in Europe.'

A comparative assessment of other companies reveals that Microsoft will invest more than $5 billion in 2003. Oracle and Sun Microsystems invest between $1bn and $2bn and Intel $4bn. There are no figures available for IBM.

Asked if Microsoft plans to continue investing in the European economy or acquiring European companies such as Denmark's Navision, Courtois declines to offer any figures but replies that the company is focused on responding to the needs of European customers in the development of accessible technology and by driving fundamental research from Europe. This will involve a 'serious and significant financial and resources commitment on the part of Microsoft'.

Courtois estimates that 1.5 million IT jobs have been created in the EU through the collision of the internet and the personal computer and that more than 1 million people are engaged in reselling Microsoft technology in western Europe.

With the EU in the process of expansion and the IT industry trapped in the worst recession for 20 years, Courtois concedes that the business environment is difficult. But he argues that the opportunities for a versatile company greatly outweigh the challenge of low European economic output and PC sector growth of around 5 per cent.

According to Courtois, companies such as Microsoft now have to show customers how to achieve 'more with less' - particularly among Europe's 20 million small businesses, which have the most to gain from efficiencies that technology can bring in supply chain management.

While Microsoft continues to dominate the PC and small business applica tions market, at the opposite end of the business spectrum, the company is challenging the position of the traditional Unix software market with its Windows 2003 edition.

In partnership with traditional 'Big Iron' companies such as Unisys, it is winning converts to the Enterprise edition of the windows operating system among many larger European companies and government departments, as a reliable and cost-effective replacement for older mainframe systems.

Is Europe's growing enthusiasm for open source (Linux) computing a serious challenge to Microsoft's plans? Courtois appears unconcerned. 'There is,' he says, 'a measure of ambiguity to the argument revolving around open source and open standards.'

While Microsoft has been revealing its source code to Governments, it has been equally active in working with the industry to develop and support the next generation of open standards.

These say Courtois 'will complement our world, where data can be shared as easily as text and pictures, an example of how we are enhancing technologies and connecting all systems, not just Microsoft's. This is a credible, open and innovative approach which even our sceptics would agree is a real commitment.'

Asked if there are fundamental differences in challenges facing the company in Europe, Courtois identifies three areas as uniquely European.

'There are some exceptional technology opportunities in Europe. Smart phone technology is one good example,' says Courtois.

'Tablet PCs can also leverage wireless advances in Europe, faster than in other markets. E-government is advancing quickly across Europe and European information workers are the prime beneficiaries of many of the technology advances that we are seeing.'

Because of need for legislative 'har monisation' between member states, he says, 'the EU is leading in developing many standards of the new interoperable and secure computing environment; this again offers opportunities for us to both learn and contribute.

'In addition to technology differences, there are economic differences. The small business market offers tremendous opportunities here and very strong growth rates are projected throughout the region.'

Pessimism has dogged Microsoft's efforts to build a greater level of security into the computing environment. Courtois acknowledges this: 'Microsoft is an action-oriented company. We have found that the best way to answer pessimism and cynicism is through delivering results and making innovative, secure and reliable products.'

He adds: 'In conceptual terms "trustworthy computing" is not a destination; it's a journey for our customers, for the industry and most of all for Microsoft.'


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