Growth in international markets


This morning I read a fresh article (in English) about internationalization by Kirsti Turtiainen in the SWBusiness.fi web site. I believe that the theme is valid, but I don’t fully agree with the conclusions made and I would like to elaborate.

Kirsti: The most internationalized fields are the mobile sector and games and media, which receive most of their revenues from abroad. According to Lassila, the strong internationalization of these fields is due to the extremely small and limited market the fields have in Finland –growth and success has to be obtained from abroad.

Juha: Articles talk about the findings of the recent study as if they prove an overall positive trend in the internationalization level of Finnish ICT companies. Mobility, Gaming and Media are in fact are THE major component, when we assess the level of Finnish internationalization growth. What I would like to know is, what is the opinion of Aki Lassila about the success rate of other ICT sectors.

Also I do not agree that the reason for success in these fields is due to the lack of home markets… and the inherent necessity to internationalize. The real reason is that in most of these cases the software is sold through very narrow and focused channels. Also the software sold is often off-the-self applications (games, consumer apps, configurable mobility platforms) or actually R&D work based on the clients specifications (graphics enhancers). Once the channel has been opened (with the aid of a major brand like Nokia) it can be fully managed from Finland with regular periodic on-site visits. There is only limited need to understand end customer buying behavior (since we are selling to the channel and not the consumers directly) and to have a full time local sales presence. The need to understand local market conditions and end customer buying behavior and the ability to invest in local structures is what differentiates the successful verticals from those that are struggling. It is important that we understand and make this distinction!!!!!

Lassila: We have to remember that there are companies who have operated internationally for years. They have seen the world and know how to operate there and are just starting to make profit abroad. Those are the companies that have generated the growth in international business shown in the survey, he says.

Juha: I agree that laying a solid foundation requires time, patience and resources. With a sound systematic approach the results will come over time. I just don’t know what companies Lassila is referring to, when he writes: “Those are the companies that have generated the growth… in the survey”. Again the growth in the survey comes from mobile, gaming and media, which are mostly post recession growth companies. Their success is based on their Nokia connections and the ability to use those connections to burrow into Nokia’s operator clients and technology partners. I am not saying that it is bad… on the contrary it’s excellent! However, let’s talk about these things with the right facts in mind. Those that have been hammering away with local sales teams trying to understand what being international truly means since the IPO times are showing modest growth, but still are far from having major impact on Gartner or IDC charts and reports. Their contributions to the growth figures are actually quite minimal.

I challenge all of those writing these articles to comment on how do we make an F-Secure into a Symantec or Trend Micro? How we take a Basware and see them pass the 100M e marker? Will we ever again see a Nokia type success from Finland? Can Finland create an SAP or an Oracle? 

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