Coping with the “American giants”

Abstract of the paper presented at the 4th HaPoC – History and Philosophy of Computing conference in Brno, 3-7 October 2017.

Coping with the “American giants”: mergers, relationships and attempted partnerships in the European computer industry in the early Sixties

During the 1950s, a fragmented computer industry grew up in Europe. After the enthusiasm and pioneering in a brand new business like computers, at the beginning of the 1960s these companies were weakened by several issues, such as the financial crisis and the pressure of  US competitors like IBM and General Electric. The investments in R&D  were not fully refunded by the income from machines sales after several years. The growth of a computer company, in fact, was often doomed by these costs and very often also by lack of proper marketing experience in a totally brand new field.

At the beginning of the 1960s the “American takeover” of the European computer market already started to be acknowledged as sensitive and important: several European computer companies faced financial problems and the pressure of US competitors, principally IBM and General Electric. To overcome some of these issues, the idea of a consortium of European business manufacturers emerged. A series of contacts and negotiations attempted to create a network of collaborations. The aim was to share research and development, marketing capabilities, managing and manufacturing expertise, and the construction of networks. These agreements did not succeed and by 1964 IBM had already more than a 60% share of the European computer market, while General Electric acquired some of the most prominent computer companies in Europe – Olivetti’s Electronic Department in Italy and Compagnie des Machines Bull in France. The idea of creating a European computer consortium to face the “American challenge” will reappear after a few years, at the beginning of the 1970s with the brief experience of Unidata.

This study reconstructs what agreements were attempted between 1960 and 1965, focusing on the contacts between the UK manufacturers ICT, LEO Computers and English Electric Company, the Italian Olivetti, the French Compagnie des Machines Bull and the German Siemens. We investigate the original plans of the negotiations and why they failed, framing them in the broader European context after 1957’s Treaty of Rome and the establishment of the European Economic Community.