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The Israel Perspective. Contribution of the IT Industry to Economic Development. Hanan Achsaf President, Motorola Israel Ltd. Former President Israel Electronics Association Advisor to the Prime Minister Infrastructure Communications and Information July 16, 1999.

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contribution of the it industry to economic development

The Israel Perspective

Contribution of the IT Industry to Economic Development

Hanan Achsaf

President, Motorola Israel Ltd.

Former President Israel Electronics Association

Advisor to the Prime Minister Infrastructure Communications and Information

July 16, 1999


“Today we are witnessing the early turbulent days of a revolution that may prove to surpass all previous revolutions”

The Emerging Digital Economy


IT Developments

More use of consumer electronics like TV sets,

video recorders, video games, CD players, PCs,


Computer-based communications, information,

commerce and entertainment services

Internet, Intranet, Extranet usage spreading fast

Globalisation trends and trade increase productivity

and flexibility

People spend more time on the move and want to

communicate and be informed when travelling

classifications for new media industry
Classifications For New Media Industry
  • CommunicationsCommunications facilitiesHousehold A/V equipmentTelephone and telegraph equipmentBroadcasting and communications equipmentRadio and TV broadcasting
  • ComputingComputer equipmentSemiconductorsElectrical equipment and suppliesSearch and navigation equipment
  • ContentNewspapers, Periodicals, Books, Greeting cardsAdvertisingBusiness servicesMotion picturesLibraries, vocational and schools

Source: The Digital Economy, Don Tapscott



    • personal
    • terminal
    • service
  • Integration
    • fixed/mobile
    • cordless/cellular/satellite

Towards the third generation systems

Convergence trends

  • Convergence
    • telephony
    • data
    • information/Internet
    • broadcasting
  • Information Society
    • services


  • High-quality voice
  • Music

Multimedia Applications

Remote LAN &Intranet

Internet applications

  • File transfer
  • Groupware
  • E-mail
  • Corporate info
  • WWW Browsing
  • Video Telephone
  • E-mail
  • News push
  • Networked games
  • Electronic commerce

The Future Network


Video conference

Video terminal

  • High-quality tailor-made appl.
  • Standard ISDN package




Wireless Post Card and

Electronic Business Card


  • Multimedia electronic mail

Video Conference



Fax,E-Mail, WWW

Voice Inputand Output


Personal Communicator

Global Mobile Communications

A View of the Future

The “Portable Tool Set”

enabling technologies portable tool set
Enabling Technologies - “Portable Tool Set”



Video/Still Camera






GPS Navigation


Cellular/Satellite Link

Answering Machine

Electronic Dictionary

Electronic Translator

Single Portable Unit ~ $500


40 Years: Transistor Radio

10 Years: 1kg Cellular Phone

10-15 Years ??“The ToolSet”:

Credit Card Size

80g StarTac

20kg 100-200 g

Technological solution for the “Tool Set”

10 themes of the new economy










10 Themes Of The New Economy
it a major engine of economic growth in industrial nations
IT - A Major Engine of Economic Growth in Industrial Nations

GDP Growth In The US 1995-1998 (Percent)

IT contribute 35% of US economic growth

and accounting for only 8% of GDP

comparison of multimedia output 1996 and 2005
Comparison Of Multimedia Output 1996 and 2005

Source: The Digital Economy, Don Tapscott

it changing productivity standards
IT Changing Productivity standards

US Computer Output Per Worker ($US terms)


Source: US Industry and Trade Outlook, 1998.

foreign employment by global companies
Foreign Employment By Global Companies

(Percent of Total)

Source: World Investment Report 1997

new media industry job growth 1995 2005
New Media Industry Job Growth1995-2005

Million of Jobs

Source: The Digital Economy, Don Tapscott

it investment top 15 industries it investment per worker
IT Investment - Top 15 IndustriesIT investment per worker

Source: The emerging digital economy II, June 1999

shifts to the internetworked government
Shifts To The Internetworked Government

Source: The Digital Economy, Don Tapscott

world wide web users
World Wide Web Users

Traffic on the internet doubles every 100 days !!!!

Source: US Industry and Trade Outlook, 1998

new era of digital economy
New Era of Digital Economy
  • The Internet - is evolving to an open network infrastructure and a unique venue for commercial opportunities@ Expanded customer base@ Cost effective delivery channel@ Efficient customer service
huge increases in sales volume
Huge Increases In Sales Volume
  • - Went from $16m to $300m in sales between 1996 and 1998
  • Cisco systems - Went from $100m to $4Bn in internet sales over the same period
  • Dell computers - Went from $1m per day over the net sales to $6m between Jan 1997- Jan 1998.
  • Auto-by-tel - Went from $2Bn to over $10Bn in sale over the net between 1996-1998.
how well are we measuring the digital economy
How well Are We Measuring The Digital Economy ?
  • E-Commerce - Retail sales transactions are not broken out by method of selling
  • Firm/Industry - Not yet developed the micro data sufficiently outside of manufacturing
  • Prices - New products, services and ways of selling are yet to be modeled.

Israel Electronics Industry



1998 Total Revenue - $8.0Bn

Exports - $6.2Bn

47,000 workers are employed in the industry

Sales per employee amount to $172,000

The Israeli electronics industry has 65% added value rate

12% of employees in the electronics industry are engaged in R&D


Israel Electronics Industry Outlook


Accelerated Growth Path

2005 ~ $25 Bn

(17% CAGR)

Current Growth Path

2005 ~ $17 Bn

(11% CAGR)

Total electronics industry revenue is expected to reach $10 billion by 2000

Strong government support for accelerated growth of the industry

Increased emphasis on technological education to close the human resources gap

The Israeli economy will be increasingly technology-based


Israel Start-Up Phenomena

Largest number of start-ups outside of US

Highest concentration of start-ups outside Silicon Valley

Expanding volume of venture capital - nearly $1.8 billion has been invested in 300-400 start-ups since 1992

In 1998, $150M of US venture capital was invested in Israel - more than in any other country outside the US

Over 100 Israeli companies traded on U.S. & European exchanges. More than $1.5 billion raised from placements in 1998

total capital raised by year million
Total Capital Raised by Year ($Million)

Total Capital raised is estimated at $2.87 Billion

An estimated 60% have been invested already

A total of $1.1 Billion is yet to be invested

acquisition of israeli technology 1998
Acquisition of Israeli Technology 1998
  • Elcint by GE valued @ $100M
  • WaveAccess by Lucent valued @ $56M
  • Teledata by ADC valued @ $200M
  • Memco by Platinum valued @ $412M
  • Lannet by Lucent valued @ $117M
  • Class Data by Cisco valued @ $50M
  • Mirabilis by AOL valued @ $407M
  • Picture Vision by Kodak
more acquisition of israeli technology 1996 1997
More acquisition of Israeli Technology 1996 & 1997
  • Armon Networking by Bay Networks @ $36M
  • Instent by Medtronics @ $200M
  • Scorpio Com by US Robotics @$72M
  • Orbot by Applied Materials @ $100M
  • Opal by Applied Materials @ $175M
  • Biosense by J&J @ $400M
  • RadNet by Siemens @$75M

Leading Start-Up Technologies

Data Compression

ADSL,HDSL - wide band com.

Artificial intelligence

Cryptography, security, encryption

Firewall, Compression

Data bases, data mining, Development tools,

Semiconductor Design, Asic, DSP Digital imaging, printing

Image processing, Audio, video

E-commerce, E-mail, E-publishing

Distance learning, training

Internet connectivity, multimedia, navigation, protection, service, telephony

Internet Video Streaming

Smart cards

Voice and Handwriting Recognition

Wireless LANs

Automatic PCB quality control

Bio imaging, bio informatics

Bio sensors, Cardiac imaging

Dental diagnostic and imaging


Thank You