Uncertain times for science sector

Dec 18 2008 by Andrew Mernin, The Journal

BUSINESS leaders from across the region look into their crystal balls to find out what the new year holds for the North East’' science and technology sectors, writes Andrew Mernin.

WHILE 2008 will be remembered as the year which brought corporate heavyweights all over the world crashing down to their knees, it was also a period which delivered much promise for the region’s science and technology industries.

Amid financial turmoil and the relentless tide of economic gloom, this year has seen the North East continue to make great strides towards becoming a global centre of knowledge-based industries.

North East digital businesses large and small have increasingly flexed their muscles on the world’s stage, winning international, lucrative contracts on a seemingly weekly basis.

Meanwhile, our universities have continued their ongoing drive to become champions of new-age future industries such as cloud computing and software as a service.

Of course, this year has not been without its challenges. The job market, particularly in the IT sector, has been dogged by cutbacks, redundancies and an erosion of confidence in employment security.

Funding for groundbreaking science projects has not been as readily available as in previous years, while video games developers remain at loggerheads with the Government over unfair subsidies for overseas rivals.

So what does the future hold for these burgeoning industries in the North East? We spoke to a number of heavyweight players to find out the outlook for 2009.

HERB Kim, CEO of Codeworks, the centre for digital innovation in the North East, believes the new year could bring much to be positive about despite the impending threat of recession.

He says: “The current troubles in the economy make it more difficult than ever to predict what will happen over the next year, but you can still pick out a couple of trends that we’re highly likely to see more of in the following 12 months.

“First off, we are finding that investments in networking are actually increasing in a recessionary economy as people look to each other to share leads, opportunities and war stories.

“Looking beyond the North East, I expect that the video games industry will continue to buck the retail recession as consumers turn to home entertainment – and gaming in particular – to take their minds off the credit crunch and to keep the money in their wallet.

“So far the industry has fared well despite the gloom that seems to be affecting practically every other sector, and Microsoft recently reported that November was its biggest sales month to date in Europe for its Xbox 360 console – with sales up 25% on the previous year.

“This is really positive news for our region, too, where a thriving community of games companies is based. Some of the world’s biggest publishers and developers have studios in the North East – including Ubisoft and Midway, as well as Eutechnyx, a Gateshead-based driving game specialist that has grown into one of the biggest of its kind in the world. 2009 should be yet another growth year for each of these firms.”

Mr Kim also predicts a bumper year for the digital marketeers.

He says: “Digital marketing will really become fully mainstream this year. The cost advantages of marketing via the web, social media and email are simply too strong to ignore in a deep recession. On the flip side, this means ever more spam and clogged inboxes. Sites like Facebook and Twitter may also become overrun more with professional marketing than with funny messages from old friends.”

FOR Phil Renton, managing director of North East IT giant Croft Technology, next year will see the ongoing growth of cloud computing and software as a service.

He says: “Cloud computing continues to gather pace along with SaaS [Software as a Service] but the most important point to note going forward is that the dynamics of service will change.

“IT services organisations can play a major part in helping companies improve business efficiencies and help save money as economic pressures continue throughout 2009 with the growth in Unified Communications.

“Since Paul McCartney first sang about having a Wonderful Christmas Time 29 years ago, the IT industry has been through at least three recessions and crashes – and come out the other side. So to quote some of the words of the song....the moon is right, the spirit’s up, we’re here tonight and that’s enough.”

MIDDLESBROUGH-born Ian Neild is telecoms empire BT’s very own time lord. As a futurologist, he is charged with keeping the company ahead of its rivals by predicting the impact and use of technology in years to come. As part of the BT technology timeline project, his long-term predictions include the advent of robot footballers, space elevators and the re-birth of the woolly mammoth.

In the short-term, he believes 2009 will go down as the year of the mobile phone.

“In the short-term we will see an increase in what we use our mobile phones for. There will be 2D barcodes so you could be at a bus stop with an advert for something and you could scan a 2D barcode which makes stuff happen.

“It could take you to a website to buy tickets for the event or, if you point your phone at that poster, you could get an animated video appearing.”

In terms of the technology industry, Mr Neild believes that mobile phone makers will spend next year jostling with Apple at the top of the tree. “Everyone’s in turmoil now that the IPhone has appeared. Maybe we will see Microsoft getting involved in mobiles,” he says.

SUE Ormerod is managing consultant and IT specialist at Newcastle recruitment firm Nigel Wright. She envisages ongoing turmoil in a “patchy” IT job market.

She says: “A lot of clients are looking at up-skilling and hanging on to the really good staff and making sure that people are working as efficiently as possible – it’s more cost-effective to hold on to staff.

“Companies are telling me that, for the first quarter, things will be the same and then they will reassess it after that. They are less bullish about it now and there’s a lot more caution.”

DESPITE a tough year for retailers, the impact on Gateshead video game maker Eutechnyx has been limited and the company has enjoyed a period of growth at home and in the States.

While founder Darren Jobling believes his firm will be well equipped to deal with what promises to be a difficult 2009, he expects to see a number of big corporate casualties in the industry next year.

He says: “I think there will be a big shakedown in the industry and we will see some of the biggest players collapsing. A lot of people were owed money from Woolworths and those revenue streams they had have disappeared. It may be £50 to look on but on average that’s 20 hours of entertainment per game rather than two hours for a movie.”

Meanwhile Eutechnyx will be creating up to 30 new jobs in the new year ahead of the release of two major driving games.

AS CEO of Centre of Excellence for Life Sciences (CELS), Mike Asher’s remit is to drive the healthcare economy of the North East, which includes the development of life sciences. He predicts another difficult year for the science sector.

He says: “I think 2009 is going to be a more difficult year than 2008. Financial resources will be more limited for both the research institutions and for businesses.

“There will be less speculative research and business conducted. Institutions will be more focused on work that will generate financial returns.”

Page 2: A look back at this year's highlights in the technology industry