Iceland offers more...

Iceland boasts a thriving software industry
Iceland is a prosperous country, with all the characteristics of a modern welfare state. GDP per capita amounted to USD 30,600 in 2000, the fifth highest in the world. The small size of its population has not inhibited economic growth, prosperity and technological innovation. It has made significant ground in knowledgedriven industries such as IT, software, finance and biotechnology.

Less is more
Iceland’s IT industry has adapted to the country’s small size and turned it into an advantage. Instead of specializing in technical areas, IT experts specialize in problem domains. The small size of the country and the short distance to customers make developers acutely aware of the problem that needs solving - not just their own small share of the pie. The strengths of Iceland’s software and IT sector lie in entrepreneurial labour, small-scale teams, good education and

adaptability, reinforced with sophisticated telecommunication systems. In a small economy, the distance to other professional sectors is shorter too, making it easy for Icelandic software companies to draw upon the knowledge of other specialists. This has been evident in the medical software field, where doctors, often employed by the government-run healthcare system, have collaborated with IT specialists to create state-of-the-art solutions to increase efficiency, lower cost and design new treatments. Icelandic software and IT designers have specialist know-how and long practical experience in creating solutions for food processing and fisheries, bank technology, multimedia, Internet applications, electronic commerce, real-time telecommunications systems for aviation and transport, medical software, and general office and database systems.

Early adoption
Iceland’s software industry has also been assisted by the willingness of the society to accept technological solutions - and by the early decision of the government to exempt IT hardware and software from tariffs. IT has been widely used in all industries. For example, the fisheries industry is heavily dependent on IT, and the investments made there have paid off. Iceland is a global leader

in sustainable fisheries management and is widely respected for running its fisheries industry profitably - largely due to technological breakthroughs in which IT plays a key role. The population has also embraced IT-based solutions in everyday life. Iceland boasts the highest proportion of Internet banking, with all banks offering secure web-based banking, actively encouraging the population to take advantage of the services offered there. The government plays its part as well, with over 60% of the population and 85% of corporations filing their income taxes over the Internet in 2001. All of these solutions are home-grown and tend to be far more advanced than those offered on the global market. Iceland’s software companies are therefore at the forefront of technology - with their products tested on a demanding user population.

Backbone of a digital nation
For its broad and willing customer base of early adopters of IT and communication technologies, Iceland is almost unrivalled. Backed by the world’s first fully digital telecommunications system, and an export-driven economy, Iceland’s software companies are truly connected in every sense of the word.

• Sophisticated telecommunication systems.
  
• The highest mobile penetration rate in the world: 80%.
  
• Fast becoming a cashless society: 99% of private consumption goes through payment cards.
  
• Telephone charges, both residential and business rates, are among the lowest within the OECD.
  
• Only 18% corporate tax and the most flexible labour legislation within the OECD create an excellent business environment.
  
• Easy nationwide media coverage.
  
• Dynamic software development environment.

Icelandic Software on the Move
The highest mobile penetration in the world has also helped Icelandic software companies to lead the way in mobile-oriented solutions. Due to heavy reliance on telecommunications and the export-driven focus of the Icelandic economy, Icelandic companies and end-users are major consumers of communications solutions.

Icelandic Telecom, the nation’s incumbent, has recently launched a service allowing authenticated users to query the mobile system about the location of mobile phones. This service gives parents a rough geographical indication of the whereabouts of their children, the majority of whom carry mobile phones these days. An adaptation of this system is in use in Finland to let authorities keep track of parolees. More business-oriented solutions have also been deployed in fleet management and other fields. Other mobile communications solutions have also been created, deployed and exported, in the fields of mobile messaging, mobile access to e-mail and corporate intranets, mobile banking and creation of mobile services.

Outward focus
Iceland’s software industry and IT-driven companies have been increasing their share in national exports. Now accounting for 8% of gross national exports, this share has increased rapidly in the last decade. Pure software exports account for 2% of exports, while other high-tech exports, heavily dependent on software, account for another 6%. These include fisheries and fish processing equipment which uses optical technologies to minimize waste in processing, sleep monitoring equipment to facilitate research and treatment of sleep disorders, point-ofsale systems and many other solutions.

Not included in these figures are foreign-funded research activities in the health sector, where genetic information is being analysed for international pharmaceuticals manufacturers, and significant grants to research heart disease, all heavily dependent on data analysis and data mining solutions. Great emphasis has been given to education, which is compulsory to 10th grade and free or heavily subsidized up through university and graduate level.