Europe had iPhone precursors before iPhones were a thing.

https://en.wikipedia.org/wiki/Nokia_Communicator

And don't forget ARM was initially a UK/EU design. Arduino and Pi still are.

Also not doing so badly with fintech and entertainment.

https://www.information-age.com/value-of-european-tech-compa...

> Europe had iPhone precursors before iPhones were a thing

That’s the point. Where are they? They couldn’t compete due to lack of scale. They couldn’t scale due to structural restrictions on scale.

The next iPhone isn’t going to come from Europe. It may be first developed there. But an American or Chinese copycat will rapidly advance upon them.

The previous range of state of the art smartphones did come from Europe. They couldn't compete but not because of structural restrictions on scale - just because of a series of bad decisions that were independent of the continent they were developed on.

It's more likely the next generation will come exclusively from China - not because of structural restrictions on scale but because it's deliberately built up its electronics manufacturing base while the US and Europe allowed theirs to dwindle because short term profit margins outweighed long term industrial strategy.

> previous range of state of the art smartphones did come from Europe

Right, but where are they now? The article says in just its third paragraph that "Europe used to pack a punch." Up to 2000, "nearly a third of the combined value of the world’s 1,000 biggest listed firms was in Europe, and a quarter of their profits." That aligns with the state of the art having a home in Europe around then.

But something changed over the past 20 years. It's apparent from the outside looking in. But it remains--as made apparent by this thread--shockingly controversial within the Continent.

>That aligns with the state of the art having a home in Europe around then.

Does it? Bigger doesn't mean more state of the art. Comcast isn't state of the art. Exxon isn't state of the art. Most big companies aren't Apple.

Moreover, the size of American companies is somewhat exaggerated cos of liquidity being pumped into the stock market.

The US gov didn't pump liquidity directly into the stock market: they reduced the cost of borrowing, which increased investment in basically everything, e.g., collectible baseball cards. My point is that investors bid up the price of European stocks as well as US stocks.

Who says the change was in Europe? The US got around to leveraging its comparative advantages in internet tech and grew some huge companies. The Facebook was never going to emerge from Poland, no matter how much public policy tried to support smart Polish engineers building PHP frameworks for people to upload pictures of their friends. Europe did not create any Facebooks, but achieved comparable productivity and GDP growth rates spread across a more diverse range of fields, and excelled in fields like Coronavirus vaccine research despite comparatively modest success stories in selling digital advertising. It is not obvious that we are worse off as a result, or that a giant company like Facebook is substantially more likely to come up with the Next Big Thing in technological progress than a merely large one like Siemens, or even a reasonably well capitalised research company well outside the top 1000 firms. The value of growth is demonstrated in goods and services, jobs and potential for goods and jobs across the entire economy, not in vanity metrics like number of companies with enough monopoly power to show up in top companies indices.

(And China was always going to move up the value chain in consumer electronics and grow faster than both of us; when it does so further in the next couple of decades it need not represent a flaw in US/European policy)

Nokia? Lack of scale?

Nokia couldn't compete because they made a string of incredibly poor investment and management decisions, such as the N-Gage, until their mobile division was eventually bought out by Microsoft. Even with Microsoft's scale they couldn't turn things around.

The reality is that there were a number of mobile phone manufacturers making lots of really bad decisions whilst trying unsuccessfully to compete with the likes of Apple and Samsung. They aren't gone from the market because they lacked scale: they're gone because they were stupid.

Microsoft buying Nokia had nothing to do with saving the company. Arguably, buying Nokia and running it into the ground was an expensive gamble to push Windows 8 Mobile + Windows 8 desktop at any cost. Which was already failing before the acquisition was even complete. I'm still stunned the Finish government allowed it to happen. Nokia went from, "probably could turn this around" to "smoking wreckage of a company" in less than a year.

At least from Risto Siilasmaa tells a different story in his book. He was in the Nokia board in the last good years and then lead the effort to turn things around. If I remember correctly, he writes in his book that at the point of sale to Microsoft, Nokia was already very close to go under. In Finland, it is generally seen that the deal with Microsoft was a complete steal from Nokia, they got much more than the value was at that point and Microsoft even agreed to loan them hundreds of millions to buy full control in Nokia-Siemens networks.

> They couldn’t compete due to structural restrictions on scale.

Mhm. Cause a working marked with healthy competition never did anything good.

Just one question, how did European car makers then become what they are? Even though its impossible?

> how did European car makers then become what they are?

Cars have for a long time been tightly linked to the military. Every major Western car maker up to the last decade at some point built tanks.

So basically you're saying Europe should start another World War to make sure their companies stay competitive?

> you're saying Europe should start another World War to make sure their companies stay competitive?

No. You asked how Europe got certain economies of scale. I answered. Through the engines of past wars. Future wars don't guarantee similar results.

If Europe wants globally-relevant big businesses, it will likely require social upheaval on the scale of war. (I’m not betting on it.)

The precursors to the iPhone were just garbage (I say this as a power user of these devices). There is a reason Android dropped their existing plans to mirror the iPhone form factor. It was a fundamental shift that fixed so many usability problems that it started the entire smartphone revolution.

> And don't forget ARM was initially a UK/EU design.

For sure, but ARM doesn’t manufacture and has not meaningfully stepped into the datacenter where low power could be a home run with some more effort.

>Arduino and Pi still are.

Yep, but these serve very little of the public. The Pi as a desktop for regular users has failed.

These are great companies but they don’t have the engineering and financial muscle to completely reshape entire industries. You need to own the stack top to bottom to do that kind of change and those companies are innovators at just one level.

On January 8, 2007, the day before Jobs announced the iPhone, Apple had a market cap of $73.76B (source: https://www.macrotrends.net/stocks/charts/AAPL/apple/market-... ) That's not exactly tiny (except if you compare to their $2T today) but it's also not exceptional. There are hundreds of companies of comparable size, including in Europe. And they gained experience producing mobile devices with the iPod released in 2001. I can't say what size company they were back then (my source only goes as far back as $33B in 2005) but certainly they were smaller.

So I think it's wrong to say that "A small business will never be capable of producing anything like the iPhone for example." since a small business can become a bigger company releasing innovative products like the iPhone.

Yeah isn't that kind of the idea how innovation in working markets with healthy innovation (i.e. no monopolies preventing innovation by smaller companies) should work? Funny how that is forgotten when it comes to comparing penis sizes.

Fairphone is European and small. There's really interesting enineering under the hood.

If anything, Apple is the counter example of being efficient at innovation. They mainly package and market existing ideas in a really efficient way, but having such a capitalisation actually create so little is a waste. The same money spent on a lot of smaller companies is much more likely to produce actual innovations

> They mainly package and market existing ideas in a really efficient way

This is completely erroneous. They do often take ideas originating from outside the company, either by acquihires, consuming open source, or simply just using unprotected ideas.

However the amount of resources they pour into refining and integrating those ideas into a platform that can be manufactured at scale and that consumers and developers can absorb is very large.

It’s fair to criticize Apple for not originating core technologies, but to suggest that they don’t invest much in developing them is just inaccurate.

I'm not saying they don't invest much, I just say the result is really underwhelming for the capitalisation they have to say the least. It's just more of the same thing year after year.

So yeah, they invest a bit, but it looks like a big waste of resources in my opinion. The same money given to a lot of diffferent companies would drive much more innovation and employ much more people.

> I just say the result is really underwhelming for the capitalisation they have to say the least.

Given that they are the market leader by far in many of their product categories, it’s odd that you imagine someone else could be doing better with less.

The fact is that nobody actually is.

If you are right, then whatever disappointment you have in Apple, presumably applies even more so to their competitors.

> It's just more of the same thing year after year.

You mean they haven’t introduced enough new product lines?

Their actual technology platform is dramatically different today than it was 5 years ago. If you think it’s just more of the same, it means you are only looking at the outside.

> The same money given to a lot of diffferent companies would drive much more innovation and employ much more people.

The same money is given to a lot more people and hasn’t.

Yeah but doesn't Apple rely on European companies like Bosch for sensors and stuff? So, no iPhone without those crappy uninnovative European companies.

Oh and Linux and the WWW were developed in Europe, if I remember correctly?

Yes, but how is Europe monetizing those things? Just because something was invented here is irrelevant if people can't use it to pay rent or create new well paying jobs.

Europe _has_ monetized these thing, through open source companies like MySQL and QT. But even if it hadn't they're still a net positive for society.

Creating jobs isn't monetizing. It's the opposite, it's SPENDING money. People as a rule paying rent more easily and having better paying jobs is what the EU looks like. The scale factor of US mega-companies is about heightened efficiencies of scale making the companies not HAVE to 'create as many jobs' as a hundred smaller companies would have to create. You've got it all backwards as far as how the giant US companies are competing.

You DO NOT compete by paying more to the workers and having more workers than the competition. EU is doing the things you say are good, and that's why they are not competing as well with the giant US firms.

So doing good is a bad thing now? Not the whole world follows the US approach where only making money seems to count. Luckily.

They are produced in Europe (Bosch, STM, Infineon etc.. have way more factories in Europe then outside it) and pay taxes there.

Intel, Nvidia, AMD and Apple M1 chips are (mostly) not made in the US but they generate more revenue for the US tech sector as they're high-margin products and their US based designers extract most of the value from their sales with Asian based manufacturers TSMC and Samsung being next in the food chain and quite recently announced building new cutting edge fabs in the US, instead of Europe. That should tell you something.

Europe making high volume low margin chips is not bad (especially in the current shortage) but is not the best position in the market you'd want to be in, especially long term with China hot on your heels. Just ask any business analyst.

Intel chips are made in the US.

Software often does not rely on huge capital. There‘s a bunch of European companies that have a good chance of doing exceptionally well (klarna, trade republic, celonis, biontech come to my mind, for example).

That's changing. A search engine index requires titanic amounts of capital. Likewise so does building a web services platform that can compete.

Meanwhile, if you don't have a platform like that to build off you are severely constrained in many other markets. Look at elastic - this is the kind of business that will dry up in the next 5-7 years. It's structurally unable to compete without being part of a major web services platform.

It used to be that building a car company didn't require a huge amount of capital, either. Detroit had hundreds of small automotive businesses before consolidation under the big 3 took place. We are witnessing the same process take place in tech.

What's your point? That letting tech giants taking over just for a little faster innovation is worth it? Maybe the European approach is a little slower, but leads to better results?

But then ... what technology was really advanced by companies like Facebook? Except the ad-surveillance-machine and stuff you only need if you run a multi-billion-people "social" network ... the only thing they innovate in is business models that hurt society.

Once big companies take over innovation stops and other companies win.

The US does have some major advantages, marketing, flag waving, cultural supremacy (which feeds into marketing), and the ability to create and exploit rent seeking at a global scale.

It benefits the companies and the share holders, but doesn’t neccersarilly benefit the American worker. Nobody care that Nike and Addidas are used globally when the employees are in Bangladesh on 10 cents an hour.

My point was only that once an industry matures it starts to consolidate and demand huge amounts of capital to compete.

And, that software is maturing.

In much the same way Japanese automobiles didn't compete with US in the 60s by having a plethora of automobile startups started in peoples' garages. It was done with large companies copying American tech being plowed with lavish subsidies and a protected domestic market.

Europe will likewise not compete with American tech head on with small tech startups either. That ship hasn't quite sailed yet, but I don't think it's far off.

I hope I'm wrong.