German Rhine Dubbed Europe’s Silicon Valley

Germany’s Rhine-Main-Neckar has been singled out as Europe’s answer to Silicon Valley, after companies based in the region were found to account for 40 percent of the worldwide revenue generated by European software vendors.

According to a study by private equity firm Truffle Capital, software revenues in the Rhine hit €11.7 billion (£9.9bn) in 2009. Although this figure was down from the previous year – when the region pulled in €12.5 billion (£10.6bn) – it is still leaps and bounds ahead of other European software clusters such as South East England and Île de France.

The success Rhine-Main-Neckar is largely down to two major international vendors: SAP and Software AG.

SAP, which topped the Truffle 100 ranking of software vendors this year, pulled in €10.7 billion (£9.1bn) single-handedly in 2009. Software AG, meanwhile, recorded revenues of €847 million (£721m).

“We have taken tremendous strides in further establishing the software cluster in Rhine-Main-Neckar,” said Karl-Heinz Streibich, CEO of Software AG. “This has resulted in an €80 million (£68m) investment in the development of future emergent software technologies in the region.”

Need for political support

According to Streibich, governments at both regional and national level have been highly receptive and supportive of cluster activities in the Rhine. However, in many cases, the development of clusters elsewhere in Europe has been held back due to lack of political support.

“The Truffle 100 survey of European Clusters reveals the magnitude of the challenges facing Europeans when it comes to the development of technology clusters capable of competing on the international stage and able to emulate Silicon Valley, the Boston region and their likes,” said Truffle Capital co-founder Bernard-Louis Roques.

“Only 5 regions have revenues above €1 billion (£851m): one in Germany (Rhine-Main-Neckar), three in the UK (South-East England including London, as well as North-East England and East England) and one in France (Ile de France including Paris).”

South East England was ranked second in the Truffle Capital ranking of European software clusters. The region pulled in just over €3 billion (£2.5bn) in revenues last year, up from €1.9 billion (£1.6bn) in 2008.

Roques praised the “impressive dynamic performance of several flagship vendors including Misys, Microfocus, Kofax and Sophos”.

East End Tech City

The news will be music to the ears of Prime Minister David Cameron, who earlier this month outlined his vision for a “Tech City” in the East End of London to rival Silicon Valley.

Intel, Google and Facebook have all committed to opening research labs or innovation centres in the area, and consulting firm McKinsey has also expressed an interest.

Among other names mentioned were BT and Cisco.

“Our ambition is to bring together the creativity and energy of Shoreditch and the incredible possibilities of the Olympic Park to help make East London one of the world’s great technology centres,” said Cameron at the time.