Brad Howarth, author of Innovation and Emerging Markets - Where the Next Bulls Will Run told attendees at an Australian Stock Exchange seminar the local investment community may be making a mistake in steering clear of the local tech sector. He said they could benefit if they were prepared to support the sector - in particular those tech companies not typically categorised as being part of the sector.
Australia has traditionally built its economy on the strength of its primary production exports from the mining and agriculture industries. Since the tech bubble burst investors have been steering clear of technology companies due to the stigma attached to the industry, but few realise that some of the most successful areas of the technology sector are linked to the primary industries Australia is so good at.
For example, Australian mine management and exploration software is used in more than 60 percent of the world's mines, and contributes AU$3 billion each year to the Australian economy.
"It's completely hidden," Howarth told ZDNet Australia . "There's been no infrastructure in terms of industry association to channel information into the marketplace."
This is changing with the creation of industry bodies such as Austmine, who represent 120 mining technology companies and claims exports of mining technology and services will outstrip all mineral exports bar coal by 2010. That would make it bigger than exports of uranium, copper, zinc and aluminum combined.
"While we lament the absence of an Australian Nokia or Microsoft, we ignore the fact that combined, our technology effectively 'owns' large markets," said Howarth. "Within Australia are real gems that are mostly ignored by mainstream investors and media - in particular mining and agriculture. And hence we run the risk of missed opportunity on both sides of the innovation and investment fence."
"It's ignored to the peril of Australian investors," said Howarth, who said successful start-ups might issue their Initial Public Offer (IPO) on overseas exchanges in the belief it would nab them more money.
According to Howarth the reason why "Australia's technology industry was relegated to producing second-grade companies" is because of two opposing forces in the industry. On the one side is the fact that Australia can produce technical innovation that in many fields is at or above the level of world's best practice. This is opposed, according to Howarth, by the frequent failure of Australian companies to commercialise that innovation.
The five main reasons for this are:
- There is a negative view of entrepreneurs in Australia.
- A small local market means companies must focus on overseas sales almost from conception.
- Geographic isolation makes it difficult to keep abreast of industry developments.
- Australia was slow to develop its own technology industry.
- Australians are not good at pitching themselves to others.
6th reason: Lack of govt support for the tech sector.
Anyone remeber the Icecap?
Developed a fair few years ago, a mini refrigeration unit for cpu's. Kept a 486dx2/66 running between 4-10 degrees C. And required very little power.
Our govt in all their widom, couldnt look to the future, and knocked back the funding request.
Given that the average cpu fan now is about the size of a nuclear cooling station, this would have been a big earner for aust.
We have proven to the rest of the world we can innovate beyond what anyone else can, but we cant seem to get the local support we need.