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Tech Industry

Europe a hot spot for tech growth

Americans flocked to Europe in record numbers this summer, not for the usual lure of art and culture, but for technology business.

Americans flocked to Europe in record numbers this summer, not for the usual lure of art and culture, but for the prospects of a burgeoning technology market.

The latest example is yesterday's announcement by American technology publisher CMP Media (CMPX) that it signed a deal to acquire a 50 percent equity stake in German publisher Datacom Verlag. The deal gives CMP two new networking titles and one MIS publication in Germany.

CMP's move is part of a larger trend among technology companies toward European investment. That trend has accelerated along with European high-tech market demand in the past few years, and growth is expected to continue.

"Because of the explosion of the Internet, the trend over the next couple of years is huge," said Paul Papageorge, vice president of marketing communications firm CKS, Europe. "Growth will be greater in non-North American countries than in North America, and Europe is a big piece of that."

Germany, the United Kingdom, and France stand to grow the most and in that order, according to Papageorge.

Another example of American interests expanding in Europe this summer is America Online's (AOL) deal with WorldCom (WCOM) and CompuServe, which will add nearly a million European CompuServe subscribers to AOL's subscription list. CompuServe is the leading Internet service provider in Europe.

Another ISP that swelled its continental ranks this summer is UUNet (UUNT), which acquired the Netherlands' largest ISP, NLnet, and plans to expand into Sweden this year as well.

Europe has been a gold mine for hardware companies as well. Dell credited its better-than-expected second quarter results to soaring European server sales. Dell's German and French sales rose more than 60 percent in local currency terms for the quarter.

European computer sales lagged five to seven years behind domestic sales but then followed the exact trend they had followed here, Papageorge said. He expects Internet growth to follow even faster on PC penetration, with Europe making up for lost time in the next 18 to 30 months.

In addition to a general trend toward globalization, Papageorge credited the deregulation of the European phone companies, which is driving down the cost of local phone calls and therefore the cost of Internet use.

American companies looking to do business in Europe face one basic challenge: understanding diverse local markets.

"Europe isn't big, but it is completely diverse in terms of language and culture," Papageorge said. "The challenge is going to be to be global and local at the same time."

As far as CMP is concerned, its deal will also strengthen ties between CMP and Datacom Verlag owner the Weka Group. Weka, which copublishes with CMP the German-language versions of InformationWeek and Computer Reseller News, is the second-largest trade publisher in Germany, according to CMP.

CMP's U.S. publications and Web sites include Windows Magazine, InformationWeek, Computer Reseller News, and EE Times. Other European CMP ventures include Informatiques Magazine in France and InformationWeek in England.