HANNOVER - Information technology and telecoms giants have been lavishly entertaining strategic guests at their annual CeBIT fair in Hannover, Germany, despite the recent downturn in the U.S economy. A handful of small companies from Latvia and Lithuania were also staking out territory.
The exhibition (March 22-28) presented little that was really new, said Juris Kaza, correspondent at Latvia's Diena newspaper. Companies were instead trying to turn established technologies into salable commodities. "The industry is holding its breath," said Kaza.
Hari Haran, a senior executive at U.S.-owned Lucent Technologies, put it a little differently when he addressed journalists in the company's purpose-built theater: "We're moving from community building to profit building," he said.
Most of the stands were elaborately designed structures, some with their own rooftop restaurant. Seated in his relatively modest stand Idrakas Dadasovas, director of Lithuanian software company Penki Kontinentai, was doling out shots of Metaxa and chocolates to passing journalists on the opening morning.
As a provider of software to retail banks in the Baltic states he was keen to show off an ATM machine where you could not only withdraw cash but also pay your gas bill, buy a parking ticket or a lottery ticket, and plead with your bank manager by video link-up - assuming people in the queue behind you were patient.
His staff were gaining valuable experience in the global marketplace, said Dadasovas. "There are customers here from Saudi Arabia, Argentina, and Canada, all with different questions to deal with. It's an education; it improves our managers' sales skills."
For Mark Shafro of M. Shafro and Company, producer of computer-controlled video surveillance systems, Hannover was a chance to trawl the 8,000-plus exhibitors in search of a strategic investor.
Having installed a system for monitoring the Latvia-Belarus border, the Riga-based company is eager to branch out.
"We're looking for partners who know the west European market. We have the technological know-how, but we don't know the market and we can't afford the certificates necessary to sell there."
Also offering its services to the security sector was the Lithuanian company Technogama, touting a nearly foolproof system for identifying speakers on the basis of their "voice print," useful for identifying callers from public telephone boxes.
With a wealth of Soviet research behind it, Technogama is ahead of its Western rivals, said marketing manager Virmantas Galdikas. For a disturbing account of Technogama's Stalin-era predecessors readers could turn to Alexander Solzhenitsyn's novel "The First Circle."
The company was mainly looking for partners at CeBIT, rather than customers, said Galdikas. "Our clients are rather specific."
The economic problems in the United States are not being felt in the Lithuanian hi-tech sector, according to Edmunds Zvirblis of the Infobalt association, which organized the Lithuanian stand and represents 142 companies.
"The crisis is not bad for us," he said. "Hi-tech companies in the U.S. don't import much from Lithuania. The main market for Lithuanian hardware is the European Union and the former U.S.S.R., while our software businesses are oriented towards Germany and Northern Europe. Our investors are mainly in Scandinavia."
Curiously no Estonian companies exhibited at Hannover, an absence that would have to be looked into, said Indrek Bartels, head of Estonia's Association of Information Technology and Telecommunications Companies.
"Exhibiting at CeBIT is rather expensive and our priority is the Estonian market where there is still a lot to do. But the telecoms sector is bigger and more capable of exhibiting there," he said.
Ambitious Baltic IT specialists might be encouraged by German Chancellor Gerhard Schroder's speech at the CeBIT opening ceremonies. In it he restated the need for IT specialists to immigrate to Germany. For each IT specialist who immigrates, three jobs are created for Germans, he said.
But the idea of a Baltic brain-drain does not greatly concern Einars Bindemanis, director of small Riga software company, Media Parks, another of those which could not afford to go to Hannover.
"It will be harder to keep people when we join the EU, but our people are having more fun working here than they would in Germany. They can go if they really want big money, but there are less regulations inhibiting people here. We don't have a culture of putting people in boxes."
Bindemanis believes Eastern Europe is a good environment for small hi-tech companies. "You don't need to meet the scalability and reliability requirements of the massive U.S. market. Companies can test niche products in these small markets, with small populations, before transferring them to other countries."
But Morten Hansen, professor of economics at the Stockholm School of Economics and the Baltic states' Eurofaculty, says the Baltics have some way to go before significant numbers of foreign investors follow the example of multinational corporation Exigen, which bought up Latvia's SWH Technologies last year.
"The Baltics can forget about emulating the Irish in the short term. IT education here is not bad, but we can't only talk about IT education. The ability to speak English matters beyond everything. There need to be improvements in every sector.
"Foreign firms would scream when they see the bureaucracy here. Companies will only come if it's uncomplicated, if there is no bureaucracy, no language barriers and no tax barriers. For that you need all-round education. Society functions slowly here and is not easily changed."
Bindemanis agrees that IT education in Latvia is inadequate. "Most of our specialists didn't learn Web Site design or programming at university. They taught themselves or learnt from colleagues. Everything I know I taught myself."