Telecom Israel 2006: Shalom to the World!

This edition could almost have been a smaller show considering the military action in the north of the country, not too much before the show. It is to the credit of the Israeli telecom industry that they were able to put up a very good show. The event hosted over 20,000 visitors and 40 delegations from 70 different countries

The conference at Telecom Israel had a good set of speakers. Key people who commanded attention were John Hoadley, CTO, Nortel Wireless; Kris Gopalakrishnan, president & COO, Infosys; Alan Mottram, chief marketing officer, Alcatel; Dr Valerio Zingarelli, vice chairman, Fastweb; Andrew Gilbert, president, Qualcomm Europe; and Dr Yossi Vardi, chairman, International Technologies.

The organizers of Telecom Israel also recognized the contributions of individuals and companies at the trade show. The award for Lifetime Project went to Elisha Yanay of Motorola. The award for Investments in Telecom industry or telecom market was given to Intel-Israel, and ECI Telecom bagged the award for Innovations and Breakthrough Technologies.

More than Telecom Israel, the event, what impresses about the telecom industry in Israel is the innovation that is pervasive in almost all aspects, and in what the industry has already achieved. It is estimated that Israel would export $16 bn worth in 2006 and almost a third of that will come from telecom. There are more Israeli companies traded on Nasdaq than any foreign country other than Canada. The targets set are impressive too. Like from India Nasscom wants to do $60 bn in exports by 2010, the Israel hi-tech industry aims to do $32 bn by 2010 and most of that is exports. In 1996, the figure was $10 bn and in 2005 it was $16 bn. Not bad at all for a country with the population of seven million.

Focus Asia
The hi-tech industry is not looking at the US and European markets only for that growth. The rise of Asia and its emerging markets is pretty much the focus area for Israel. Israel's success in the telecom field has been no surprise to keen industry watchers. The main contributing factors have been technology innovation, active venture capitalists, qualified manpower, government support, strong local market and the OEM nature of its products. Human capital is a major asset that Israel can be proud of.

There are more Israeli companies traded on the Nasdaq than any foreign country other than Canada

"We have almost no natural resources and so we have to depend on our human resources," said Yair Ofek, deputy director general, Israel Export and International Co-operation Institute. On a per capita basis the story is impressive. Israel has the highest number of scientists and engineers with post-graduate education in the world: 135 per 10,000 compared to 78 in the US. Part of the reason is also the exposure to the latest and most advanced telecommunication equipment that the youngsters get during the mandatory military service. The level of the country's human capital can also be benchmarked by the number of patents registered, which is amongst the highest in the world again, on a per capita basis. "The secret of our success in the hi-tech area lies with our education system. We invested heavily in hi-tech education and that has been the fuel. In ten years, the number of graduates per year has increased from 1,000 to 8,000 in the hi-tech sector," said Elisha Yanay, chairman, Israel Association of Electronic and Software Industries.

Where innovation has no fear

In Israel, innovation has no fear. It has the world's highest concentration of start-ups per capita and second highest in absolute number after the Silicon Valley. Many of these start-ups have been funded by venture capitalists who are very active and also by the State of Israel, which has its own funds to encourage fledgling companies. "Currently in Israel, there are more start-up companies than any other country in Europe. The telecom exhibition is intended to expose the best of the telecom industry to the world and to create a platform for cooperation between Israeli telecom companies, foreign government bodies and international companies," said Ariel Atias, the Minister of Communication, State of Israel.

The success stories of Israeli companies like Alvarion, Amdocs, AudioCodes, Comverse, ECI Telecom etc have all been written about. These companies compete with the best in the world in all major markets including India. There a number of MNCs who have also set up major R&D and manufacturing operations in Israel. Amongst them are IT majors like Cisco, Intel, Motorola etc. "We have Motorola with a billion dollar revenue from Israel. But there are many start-ups. In fact hundreds of them," said Elisha Yanay, GM of Motorola and Chairman, Israel Association of Electronic and Software Industries. Not many of these start-ups go on to become billion dollar companies. Apart from the ones that fail, some companies that do succeed get acquired.

The sense of entrepreneurship is pretty high and there is very little fear of failure. The culture and value system in the Israeli society ensures that. "If you fail in an honest way it is not a shame. I would dedicate some of our success to the Jewish mother who encourages the entrepreneurial spirit," says Dr Yossi Vardi, chairman, International Technologies. With entrepreneurship being high can the venture capitalist be far behind? In 2005, VCs invested $1.35 bn in Israeli companies which is more than what the VCs did in India.

"The society in Israel is very tolerant to failure. If entrepreneurs fail they will invariably try again. And people who succeed will try again for more success unlike some other societies where they would rather retire after the first successful venture," says Joseph Gansell, of the Labor ministry of Israel.

Innovation comes naturally to the Israeli. It is not just about writing code but they seem to have a fairly deep understanding of end-user expectations. Exposure to advanced technology, courtesy the compulsory army stint, also helps no end. In the military the youngsters are experiencing the sort of technology that takes many more years to hit the commercial market. Telecom Israel had an "Innovation Pavilion" that hosted 55 promising start up companies. This year, MATIMOP (Israeli Industry Center for R&D), on behalf of the Office of the chief scientist in the Ministry of Industry, Trade and Labor together with IMA (Israel Mobile Association), had endorsed the Israeli start-up companies who presented in the pavilion. New integrated demos showed a variety of integrated services for the first time at the Innovation Pavilion.