Unidata or the European IT Misunderstanding – EHNE

European IT firms saw significant growth in their national markets in the 1950s. Their clients were essentially research laboratories or very large firms. In the 1960s, however, a new sales logic based on machines aimed at a growing number of client companies and institutions meant that they were confronted with aggressive American competition. Technologically speaking, the switch from computers equipped with vacuum tubes to “transistorized” computers increased the share of investment in research. And finally, in a sector where machines were rented rather than sold, manufacturers’ financial strength became a crucial factor for healthy growth in a market that was expanding rapidly. Economically and politically speaking, government commitment to supporting a sector that appeared to be “strategic” seemed unavoidable in the early 1960s. 

Europe’s Answer to the Challenge Posed by American Industry: National Mergers and Intervention

The British IT industry, for example, was thriving in the 1950s, but its market share fell continuously from the 1960s onwards. In order to resist, a process of concentration, intended to strengthen the nation’s firms, was launched. International Computers and Tabulators (ICT),  which bought the Computing Services Divisions of GEC, EMI and Ferranti, became its hub. Later (in 1968), it was the foundation for the creation of International Computers Ltd (ICL) whose disparate product range made for a very fragile “national champion.”

In France, Bull Machine Company’s situation deteriorated dramatically at the turn of the decade. In 1962, Despite the excellent technical level of the company’s products, its long-term debt convinced shareholders to accept General Electric’s buy-out offer. In July 1966, General De Gaulle decided to launch the “CALCUL Plan,” developed by François-Xavier Ortoli. The Institute for Information and Automation Technology Research (IRIA) was created to support the development of the International Information Technology Company (CII) born of the merger of the activities of the General Electricity Company, the General Wireless Telegraphy Company and Schneider in that sector. Long-standing competitors, they had a hard time working together as partners. In 1970, with 27% of the sector’s employees, the French company had just 11% of the national market, as compared to IMB’s 60%. In Germany, IT was the domain of large electric and electronics companies, like Siemens, Telefunken and Nixdorf. They enjoyed discreet but consistent support from the government. Yet their drop-off when faced with IBM’s activities was no less significant. The national dimension proved itself to be too small to compete with the United States. By the early 1970s, it had become obvious that only a European-level IT project could offer a real chance for success.

UNIDATA: The IT “Airbus”

Georges Pompidou, who was elected president of France in 1969, made integrating CII into a European alliance a condition for renewing the CALCUL Plan for 1971-1974. In the context of Great Britain’s negotiations for joining the European Economic Community, a merger of ICL and CII was considered… but never went anywhere. In the absence of an “entente cordiale,” a “Franco-German couple” was considered next. As a firm that was both well-established in Europe and well supported by the government, Siemens seemed like a reliable partner… and more importantly, one that had become available since the agreement that had tied it to the American firm RCA had come to an end. Strongly encouraged by their respective governments, the two firms signed an agreement in January, 1972 that gave rise to UNIDATA. At that point, several European firms started to worry about being unable to compete with the new alliance. Philips began negotiating to join the new entity. In May, 1972, Christopher Chataway, the British Minister of Industrial Development, proposed a broad European cooperation scheme including ICL, while at the same time discreetly working to build a rival European hub in which the British firm would partner with Nixdorf and Telefunken. When Philips joined on July 4, 1973, UNIDATA remained “continental” but could boast that it was the “first European IT group.” 

The Return of National Reasoning and Trans-Atlantic Alliances 

Yet the mistrust between the two main partners in CII reappeared between the French, Germans and Dutch within UNIDATA. Engaged in an unrelenting struggle for dominance with Thomson-CSF and a competitor of Siemens in the transportation, energy and telecommunications sectors, CGE undermined the project from the inside. Let alone the fact that the technical and commercial difficulties were considerable. In 1975, without the firm’s ever really having gotten off the ground, newly elected French president Valery Giscard d’Estaing decided to throw in the towel. With very little consideration for the German partners, he threw his weight behind an “American” solution and a partnership between CII and Honeywell-Bull. When UNIDATA was officially dissolved in December 1975, the Germans felt betrayed.

Autopsy of A Failure

UNIDATA’s failure generated a lot of commentary and attempts to explain it: the incompatibility of the three founding members’ computer ranges, their very different commercial and organizational structures, and more. Yet those obstacles could have been overcome with real leadership, as was the case – despite the equally real difficulties, which are often overlooked in hindsight – for Airbus. So more globally, what condemned the agreement from the moment it was signed was that the project failed due to the three partners’ clashing strategic visions and short-term interests. The firms had signed the agreement because they couldn’t say no to their largest client: the state. However, unlike the aeronautics or telecommunications sectors, those same governments, who were the instigators of the “European” solution, could not greatly influence a market that was becoming more and more open or guarantee that UNIDATA would have a significant share of the market. That system would in fact have penalized firms in the concerned countries, who would have been forced to use computers that couldn’t compete with IBM machines. 

The illusion lasted for a few months. It left behind the impression of a missed opportunity, when UNIDATA was actually no more – at most – than a sort of “misunderstanding” between political determination and industrial pragmatism.

Translated by Regan Kramer