Archive notice: This article was originally published on January 1, 2008. Links and embedded videos are preserved as part of the historical record.
At the same time, investments in Internet companies assumed utopian dimensions that reminded analysts of the burst dot-com bubble at the beginning of the new millennium. But the renewable-energy business also continued to boom unabated. Mega-deals from the wind, solar and bioenergy sector boosted share prices and made order books thicker. The IT industry, on the other hand, came up with product highlights this year such as the Microsoft Windows Vista operating system and Apple’s lifestyle mobile phone, the iPhone.
The US subprime mortgage crisis triggered an eruption on the financial markets in the summer of this year. After US property prices stagnated and around 60,000 borrowers with poor credit ratings were no longer able to service their instalments, the subsegment collapsed with global consequences. Because subprime loans were refinanced on the capital market, securitized as securities and sold to all financial service providers, liquidity also stalled. The central banks then pumped three-digit billions into the market to avert economic consequences. Moreover, the crisis not only curbed takeovers and mergers, but also led to a general reluctance on the part of banks regarding their lending. The Swiss major bank UBS, the latest victim of the crisis, therefore had to write off amounts in the high single-digit billions. The financial dilemma thus threatens to become a serious credit crisis that is still far from over in 2007, analysts agree.
Microsoft pursued the ambition of becoming a multimedia entertainment centre in 2007 with the market launch of the Windows Vista operating system together with a new Office package. Although what had until then been the largest product launch in Microsoft’s history promised greater security, easier usability and, not least, a higher entertainment factor with a “Wow effect”, sales were moderate compared with the predecessor version, Windows XP. Sales of stand-alone products stagnated, which dampened the euphoria and made customers’ call for the reliability of XP grow louder. Together with Microsoft, PC manufacturers met many customers’ desire for a Windows XP downgrade. Although Office 2007 asserted itself as a sales hit and Vista reached many private customers, the big breakthrough in the B2B segment failed to materialize. Dirk Thomaere, Toshiba Europe General Manager Computer Systems D-A-CH, thus admitted that he had initially misjudged the situation.
But Microsoft was not the only company to come up with a new product highlight in 2007. Apple introduced its much-vaunted lifestyle mobile phone, the iPhone, in the USA around the middle of the year. Because the group was aiming for around one percent of the global mobile-phone market by the end of 2008, market launches followed in stages throughout Europe toward the end of the year. The opinion that the iPhone would not sell here as it did in the USA remained, for the time being, confined to industry experts. The US business principle of exclusively marketing the iPhone through T-Mobile in Germany thus briefly faced the end. After competitor Vodafone D2 successfully obtained a temporary injunction against the exclusive marketing of SIM-locked iPhones, the market that then emerged produced strange blossoms. T-Mobile rival Debitel exploited the temporary iPhone unlocking to advertise its own tariff model. This provided for owners of SIM-lock-free iPhones, who had previously bought them from T-Mobile for 1,000 euros, to be credited with the difference from the conventional purchase price, amounting to 600 euros, when signing a contract. In the meantime, however, analysts consider it doubtful that the iPhone will achieve its prepared triumphal march in Japan.
The business year 2007 was also marked by Internet hype. Internet companies with unusual names, low revenues and few customers sold for high prices. Moreover, for a short time it seemed that the consequences of the burst dot-com dreams from the beginning of the millennium had been forgotten by investors. According to experts, the valuations of these companies would often lack any rationality on an economic basis. The 240-dollar partial sale of only 1.6 percent of the social-networking platform Facebook to Microsoft illustrates the disproportions. Although Facebook is valued by investors at 15 billion dollars, portal operator Yahoo puts twice as much into the balance for it. The valuation of search-engine giant Google, whose shares have now exceeded the 600-dollar mark, is similarly difficult to explain. The Internet group is thus valued more highly than IBM, although the latter has eight times the revenue. It therefore seems that only the share price counts for investors, insiders believe.
The games-console market appeared unaffected by these turbulences. The Federal Association for Information Technology, Telecommunications and New Media expects the German computer-games and games-console market alone to generate sales of around 2.14 billion euros in 2007 – growth of 21 percent compared with 2006. Despite these positive prospects, competition between Microsoft (Xbox), Sony (PS3) and Nintendo (Wii) is tougher than ever before. Price reductions and additional features court the favour of customers, who can long since no longer be reduced to specific fringe groups. According to analysts, however, the availability of games and backwards compatibilities are decisive criteria. In addition, marketing expenditure – as made clear by the example of “Halo 3” for the Xbox – plays an important role. But innovative console concepts such as that of the Wii also brought the industry high growth figures. It therefore remains questionable whether Sony’s strategy of a low-cost PS3 version will have chances that can be taken seriously against Microsoft and Nintendo.
Despite the silicon shortage and rising spot-market prices of more than 400 dollars per kilogram, the solar industry enjoyed above-average growth. Interwoven supply relationships and the expansion of solar installations made Spain and Italy a paradise for photovoltaic manufacturers. The first half of the year was thus promising for all companies in the industry, as good margins could still be achieved through only moderate price reductions. Through international sales strategies and the associated boom in the export business, market leader SolarWorld, for example, built a new solar factory in Saxony that created around 1,000 new jobs. Orders worth billions, however, also triggered veritable share-price fireworks among biogas and wind-turbine builders. While the investment holding company BioKraftstoff Nord landed a major order worth 75 million euros toward the end of 2007, Schmack Biogas disappointed after a share-price rally with a revenue warning. The northern German wind-turbine manufacturer Nordex also benefited from high demand in 2007 and helped investments in renewable energy evolve into an investment trend.
