ETRE: IT execs optimistic about ways to connect

After a morning of pouring rain, the fifteenth annual Etre technology conference kicked off in Cannes on Sunday, where the outlook was as tentatively sunny as the afternoon skies.

The tech industry is finally heading towards a recovery after the post-bubble decline, but we are not quite there yet, according to executives and industry watchers here.

"Everyone is agreeing that the down cycle is almost over and that we are headed toward recovery in 2006 to 2007," said Alex Vieux, chairman and chief executive officer (CEO) of Etre conference organizer Dasar Inc.

Industry experts cited an increased willingness among companies to invest in IT, with the caveat that investments must lead to cost savings within five years.

"Best of breed solutions aren't as important as total cost of ownership," Symantec Corp. Chairman and CEO John Thompson said during a keynote address.

Symantec operates in one of the most healthy segments of IT market -- the computer security business is growing by 20 percent a year, he said. But security is not the focus of this year's Etre, a forum where IT executives, venture capitalists and startups meet to network and discuss emerging trends.

The theme, "Making the connection," is about connecting digital devices and taking advantage at last of the third-generation (3G) network technologies in which carriers and vendors have been investing in recent years. As well as making connections, of course, it is also about making money.

Telecom operators have poured billions of euros into buying 3G licenses and upgrading their infrastructures and hope to reap returns now that a recovery appears to be on its way. Software makers and digital content and service providers are also looking for their share, with many counting on the convergence of Internet protocol (IP) and telephony to provide them with greater income. If the record number of venture capital firms attending Etre this year is any sign -- 150 have registered, according to show organizers -- then they may be in luck.

James Colvert, from technology venture capital firm Regent Associates, said he is seeing a lot more merger and acquisition activity in the technology market among medium-sized companies, and that the subjects explored at this year's conference, while not surprising, seem timely.

Wireless connectivity is another hot topic here, and Venky Krishnaswamy, of communications software and services company Avaya Inc., said his company has fielded a lot of inquiries at the show. Pinning down emerging wireless trends is difficult, he said, because of differences in each regional market.

According to organizers, 35 percent to 40 percent of the companies at this year's Etre are from North America, with 35 percent to 40 percent are from Europe and the remainder from Asia. More than 650 attendees have registered, making it the second largest event in its history, marking a comeback from the boom years of 1999 and 2000.

Although Asia is home to the fewest companies here, it is the regional star of the show. Opportunities in Asia were on the lips of many attendees, and will be continue to be as they sip cocktails at the China-themed reception scheduled for Monday night.

Asia's more mature IT markets, such as Japan, are being examined for their lessons in rolling out 3G technology and services. Keiji Tachikawa, a board member at NTT DoCoMo Inc., was a keynote speaker here. While his discussion of handsets linking people, applications, the Internet and devices may have offered a glimpse at the future, he conceded that it will be another three years before his company makes money from helping to achieve that goal.

Perhaps PalmSource Inc. President and CEO David Nagel's theory is correct. Although the industry is ready for a rebound -- and more than ready for new revenue -- consumers are still a bit jittery.

"There seems to be a disconnect between what business leaders are doing and what the consumers are feeling," Nagel said. "Consumers seem jittery and our economies appear fragile."

But then, like Cannes' clearing sky, show organizer Vieux struck a bright spot. "I see a renewed sense of optimism," he said.

Etre runs through Thursday.