Telecoms downturn to hit Cambridge


16-03-2001

The whole of Cambridge is likely to be affected by the world downturn in the telecoms sector, according to industry guru David Cleevely.

'The huge jump in sales is going to slow,' he said, 'and any company making an uncritical projection of growth needs to take a cool reality check.'



Many of Mid-Anglia's booming companies rely on the sector, but with giants such as Cable & Wireless, Motorola and Ericsson laying off thousands of staff and issuing profits warnings, the region is bound to feel the knock-on.



'Cable & Wireless underestimated how fast prices would fall and are cutting back on their telecoms investment by 25 per cent,' Dr Cleevely said.



'People in Cambridge who manufacture high tech kit may well see they have to cut back. The whole of Cambridge is likely to be affected by what is happening.'



However, Dr Cleevely, founder and boss of international independent telecoms consultancy Analysys, which is based in Cambridge, added that the city had learnt lessons from the past.



'Companies are not in the position firms like Acorn faced in the early 1980s, when they didn't notice what was happening.



'They no longer have huge inventories and are much more lean, keen, mean machines. Cambridge has grown up and I am quite optimistic about the future.'



Major players such as ARM Holdings, which has seen its chips going into a huge number of mobile phones throughout the world, has already found new markets, with only about 30 per cent of its business now concentrated in the telecoms sector.



Alan Woolhouse at Cambridge Silicon Radio said mobile phones were no longer a key focus, with PCs and PDAs (personal digital assistants) expected to take off sooner in the Bluetooth radio communications sector.



He added that he did not know whether the slowdown in the US economy would have a wider affect, taking in PC and PDA sales as well as mobile phones.



Tony Milbourn, boss at TTPCom, the Melbourn-based company which provides the technology for 10 per cent of the world's handsets, said so far he had not seen any significant affect on his business, even though the big players in the sector were under pressure and failing to achieve forecasts.



He said he felt there could be some advantage for TTPCom, with the large firms, such as Ericsson and Motorola deciding to outsource development work.



As to the US, Mr Milbourn said: 'The US is very enthusiastic about mobile data and we are doing great business there, although a long term downturn would be bad.



'But at the moment things are looking good. When the Koreans had a bad time we did more business there. It's extremely hard to predict.'



Dr Anne Glover of Amadeus Capital Partners, which has strong interests in the city and whose partners include former Acorn boss Hermann Hauser, said she thought Cambridge would be quite resilient during what, undoubtedly, was going to be a big shake-out in the industry.



She, too, felt there would be increased demand for Cambridge's telecoms consultants: 'Intellectual capital will be in high demand,' she said, 'for problem-solving and real lateral thinking.



'There will be an affect on growth, which will flatten out. Venture capitalists and start-ups will need to slow down their expectations on the roll-out of 3G and ADSL etc, and everyone providing equipment will have to look again at expectations.'