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France’s Effort to Spawn a New Google

A French state initiative will fund research in many technologies, including mobile TV and Web search. But will it succeed?

Seeking to jumpstart France’s innovation engine, French president Jacques Chirac promised €236 million ($298 million) in financing last week to a half dozen ambitious public-private R&D projects. Chirac noted that China outspends France five-to-one in research. “It is essential,” said the president, addressing French CEOs gathered at the Elysée Palace in Paris, “for us to rediscover a taste for risk and pride in innovation.”

Many observers, however, say these ambitious efforts are missing the mark. Chirac’s projects are led by a who’s who of French multinationals – while the country’s startups remain starved for critical funding. “It’s an old model,” says Alexis Mons, managing director for the French IT consultancy groupeReflect. “It’s not the way we’re going to stimulate industrial innovation in France – or Europe.”

Chirac’s projects are the first round to be funded by the national Agency for Industrial Innovation (AII), created last summer under a plan crafted by Jean-Louis Beffa, CEO of Paris-based materials giant Saint-Gobain, who also chairs AII’s oversight board. The agency’s model is to co-fund research consortia that include startups and government and academic labs, but in which major industrial players act as both “motor and manager,” according to Chirac.

Three of AII’s projects relate to sustainable energy, including advanced control systems to maximize building efficiency, biofuels production, and a novel design for light-rail public transport. Chirac also says AII will fund development of the diesel-electric hybrid cars recently demonstrated by PSA Peugeot-Citroën (See “The Next Prius?”).

It was a pair of infotech projects, however, that picked up the bulk of AII’s first-round spending. One is a consortium led by French telecom giant Alcatel, which will receive €38 million toward a four-year project to develop an affordable and energy-saving mobile TV system. That consortium includes other big names in communications, four French startups, including integrated-circuit developer DiBcom, and research labs at the national labs, CNRS.

Its innovation stems from the system’s frequency: while mobile TV systems being implemented in some European cities broadcast over a UHF signal, similar to the bands used by conventional TV, Alcatel proposes to use a higher frequency in the so-called S-band, which most countries (but not the United States) have reserved for satellites.

Alcatel’s CTO, Olivier Baujard, explains that with the S-band, devices such as cell phones and PDAs can employ two small antennas, to zero out noise from competing signals – something not possible with UHF, which requires large antennas. The result could be lower energy consumption and higher picture quality for a handset, particularly indoors and in cities, where signal reflection multiplies background noise.

Baujard says this advance should ultimately translate into smaller receivers, enabling mobile TV to grow beyond a niche market. “The target is a real handheld terminal equivalent to a mobile phone, not a dedicated piece of high-power equipment,” he says.

Networks applying their S-band system will be able to use satellites to provide universal coverage over nine channels, Baujard says. Meanwhile, in cities, ground-based transmitters would provide on-demand access to a virtually unlimited range of TV channels and movies.

Baujard says that the AII funding will enable Alcatel and its partners to accelerate the process of developing the system from handset to satellite. He predicts that by 2008 consumers will be watching S-band-ready handhelds on the first trial networks in Europe, and he looks to China, India, and Brazil for future growth. (Frequency issues will delay entry in the United States, though, where cordless phones and some other applications already use the S-band.)

No one disputes Alcatel’s suggestion that its mobile TV technology could be worth €10 billion in revenues in 2010. But many are skeptical of AII’s more aggressive infotech project. Led by French home electronics manufacturer Thomson, with €90 million in funding from AII, this project, called Quaero, is Chirac’s answer to the U.S. dominance of the Internet in general and Google in particular.

Quaero’s promise is to develop sophisticated search, translation, and voice-recognition tools, the latter for crawling through and making available the Web’s growing podcasts and video clips. The problem, according to critics, such as IT consultant Mons, is that the wrong player is at the top. Rather than Thomson, they say, the AII funding should have gone to a more agile and smarter player: Paris-based Exalead (see “The Enterprise Approach to Search”).

France’s much neglected search engine innovator Exalead has struggled to find financing since its founding in 2000. Virtually unknown in the United States, its search engine offers extensive options for narrowing a search and viewing the results, including thumbnails of each page. Instead of leading the Quaero program, however, Exalead will participate as one of five startups and even more research labs in Thomson’s consortium.

It’s a good sign that France’s leaders are asking why Europe has yet to produce an infotech success story like Google, says Mons – but their top-down solution shows they have a ways to go. “There is no innovation,” says Mons, “in innovation management in Europe.”

Bernard Buisson, coauthor of a recent book on the process of developing new ideas into products, Objectif Innovation, agrees. “Instead of enabling the creation of new companies,” he says, “the [French] state is going to waste several billion euros in large projects that won’t deliver.”

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