"Rising Anti-American Sentiment Could Slam the Tech Sector"
A "Fortune article":http://www.fortune.com/fortune/fastforward/0,15704,424088,00.html by David Kirkpatrick (via "Interesting People":http://www.interesting-people.org/archives/) warns that the economic consequences of ignoring 'world opinion' may include boycotts of US technology, further damaging the already reeling industry.
To illustrate the danger, Kirkpatrick first mentions the boycotts of Coca-Cola (for upstart Mecca-Cola, the 'Islamic' Cola) and P&G. He also lists a number of non-US firms such as Sony, Nokia, Legend, and Samsung, all of which have strong technology brands 'despite' their non-US pedigree, and points out that even many of the suppliers of these firms (perish the thought!) are foreign competitors to US firms.
The main problem with Kirkpatrick's argument is illustrated by his own example - the strongest consumer electronics brands today are foreign firms. One could argue that this is alarming on its own (I don't really think it matters all that much myself) but clearly no-one will be boycotting Sony because of so-called American unilateralism, and even if they do, it won't have much of an effect on the US technology industry.
The second problem with his argument is that the corporate market tends to be much less fickle than consumers. Firms select vendors based on technology, products, service, and relationships. Certainly brand image has some role at the start of the selection process, but unless there are actually sanctions in place against a particular country or firm, companies tend to look for the best value for money. Factors such as reliability are much more important than political considerations.
The importance of reliability is demonstrated by Kirkpatrick's other example firms, Cisco and Huawai. Cisco dominates the market for networking equipment by providing high quality and extremely reliable products. Huawai, a Chinese upstart, is in fact alleged to have blatantly used Cisco's software for its own equipment instead of writing its own software (this is the 'trade practices' suit that Kirkpatrick mentions in passing). Right now, a firm looking for cost savings at the possible expense of reliability might choose Huawai. In the future, if Huawai reached a level of reliability and functionality comparable to Cisco (without illegally using Cisco's software), it will gain market share based on a better value proposition. But will anyone really choose Huawai over Cisco because of US policy in the Middle East? Unlikely.
Posted by Stephen Bronstein at February 19, 2003 07:00 PM