US embassy cable - 02AMMAN2706

MICROSOFT EXPANDS INVESTMENT IN JORDAN

Identifier: 02AMMAN2706
Wikileaks: View 02AMMAN2706 at Wikileaks.org
Origin: Embassy Amman
Created: 2002-05-28 12:59:00
Classification: UNCLASSIFIED//FOR OFFICIAL USE ONLY
Tags: ECPS BEXP EINV JO
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 AMMAN 002706 
 
SIPDIS 
 
SENSITIVE 
 
DEPT PASS FOR ANE/MEA KIM FINAN 
USDOC FOR 4520/ITA/MAC/ONE/PAUL THANOS 
USDOC FOR 6400/ITA/TD/OEC/KFERGUSON 
TREASURY FOR PIPATANAGUL 
TDA FOR SIGLER 
 
E.O. 12958: N/A 
TAGS: ECPS, BEXP, EINV, JO 
SUBJECT: MICROSOFT EXPANDS INVESTMENT IN JORDAN 
 
 
SENSITIVE BUT UNCLASSIFIED; PLEASE HANDLE ACCORDINGLY 
 
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SUMMARY 
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1.  (U) Estarta Solutions, the result of a merger between two 
prominent and well-established Jordanian IT companies, 
represents a significant expansion of Microsoft's investment 
and presence in Jordan.  The new company bills itself as an 
international IT solutions company and consultant 
specializing in e-government, e-education, banking and 
finance, telecom, and logistics.  The deal demonstrates the 
GOJ's determination to boost the development of the IT 
sector.  End Summary 
 
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BACKGROUND 
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2.  (U) On May 20, following weeks of speculation and 
negotiations, and amidst a great deal of fanfare, Microsoft 
Vice President for Europe, the Middle East, and Africa Emre 
Birkin announced the launch of Estarta Solutions, the result 
of a merger between Jordan's two leading IT firms, ONEWORLD 
Jordan and Zeine Technological Applications.  Birkin said 
that reform of Jordan's investment framework laws and a 
favorable "IT investment ambiance" in the country were behind 
Microsoft's preference to launch a new project in Jordan. 
The new firm, which will be based in Amman, will employ 200 
people.  Among its current clients are Thomson Financial, 
Apple, Siemens, and the Jordanian government. 
 
3.  (U) Microsoft will take a small share in the company, as 
will al-Foursan, a local venture capital fund specializing in 
IT companies.  In addition to its investment stake, Microsoft 
has committed to channel business to Estarta (such as for 
creating an Arabic version of its Excel 7.0 spreadsheet 
program).  According to a banker involved as an adviser in 
the merger negotiations, some issues relating to the 
corporate structure and management of the new company remain 
to be worked out. 
 
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THE HOPE OF JORDAN 
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4.  (U) At a dinner reception given by Estarta to celebrate 
the launch and attended by the Ambassador, Minister of 
Planning Bassem Awadallah, Minister of Trade, Industry and 
Commerce Salah al-Bashir, and local IT professionals, 
Minister of Information and Communications Technology Fawwaz 
Zu'bi opened the proceedings and said the "young 
entrepreneurs" who forged the new company represented "the 
hope of Jordan".  He said the merged company represented a 
model for "what we would like to see in Jordan", and 
expressed his hope that other international IT companies 
might now be more encouraged to invest in Jordan as a result 
of the deal.  The Ambassador cited Microsoft's participation 
in the venture as "a vote of confidence in Jordan's ability 
to grow". 
 
5.  (U) Earlier, at a press conference announcing the merger, 
King Abdullah stressed the importance of cooperation between 
the private sector and the government, particularly the 
Ministry of Information and Communications Technology, in 
working "to open new horizons for IT in Jordan".  Contacts 
between Microsoft and Jordan developed following a meeting 
between King Abdullah and Microsoft CEO Bill Gates at the 
World Economic Forum in Davos in 2000.  Their relationship 
drove Microsoft's plans for expanding its presence in Jordan. 
 One reason for the long gestation period was the change in 
Jordan's Companies Law required to permit the formation of a 
joint stock company (as opposed to the more common form of a 
limited liability partnership), as demanded by Microsoft. 
 
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SYNERGIES 
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6.  (U) We spoke with Estarta Senior Director Basil Qubain 
about some of the upcoming projects the new company had in 
the pipeline.  He stressed that Estarta was all about 
creating new approaches and synergies for its clients, not 
using existing applications to solve problems.  He cited 
Mobius, a wireless platform that enables content providers to 
send web-based content to any mobile phone, and Gaia, 
Estarta's patent-pending pattern recognition software, as two 
major projects with broad applications, ranging from 
commercial to military, forged as solutions to client 
problems and challenges.  As an example of Estarta's 
cooperation with Microsoft, Qubain pointed to Muse, an 
automated intelligence interface that plugs into Microsoft 
programs and acts as a virtual information manager and 
organizer.  By way of example, Qubain explained that once an 
email is received by a user, Muse will list all previously 
received emails linked either by subject or sender, enabling 
the user to access and consolidate related information. 
 
7.  (SBU) Qubain said that the merger itself has gone quite 
smoothly, as clients and personnel from Zeine and ONEWORLD 
complement each other rather well.  He added Estarta did face 
a challenge regarding rival mobile telecom companies Fastlink 
and MobileCom, as each was a client of Zeine and ONEWORLD 
respectively.  While theoretically it was possible to retain 
both firms as clients, he said given current tensions between 
the two it was impractical and unlikely.  Qubain said he did 
not yet know how the dilemma would be resolved. 
 
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COMMENT 
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8.  (U) Coming after a dry period following the September 11 
disaster, Microsoft's decision to invest in Jordan represents 
a shot in the arm for Jordan's efforts to attract foreign 
investment despite its volatile neighborhood.  It is also a 
boost for the Jordanian IT sector.  Not just another IT shop, 
Estarta has the goods and the drive to become, as it hopes, 
the leading IT solution provider in the region with worldwide 
reach.  The success of Microsoft's investment in Estarta 
could well attract more likewise innovative firms and 
investors to a sector that Jordan expects to be a key to its 
continued economic growth. 
Gnehm 

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