Summary
After several years of profitless growth in the East, the global power
tech market after the UN “COP15” conference in Copenhagen this
December might be hoped to offer OEMs more fruitful opportunities.
But we argue that traditional vendors may well fall victim to
Rostopchin’s defence, finding instead of a glittering prize little of
sustenance for their Grande Armée.

Prologue: from Austerlitz to Moscow
This report is a sequel to our January 2008 report Borodino to Moscow and before that our October 2006
report Austerlitz to Borodino. In those reports we invited investors to consider Napoleon’s Russian
campaign of 1812 as a metaphor for understanding the outlook for global power technology OEMs at the
start of the 21st century. We have thus far argued that:
1 Emerging Asian OEMs are in the ascendancy thanks to Chinese and Indian coal reserves and the
Chinese focus on energy security, all of which advantages low-tech coal-fired technology. Coal is a
mature technology where western OEMs struggle to maintain a technological lead sufficient to offset
their cost disadvantage.
2 In the long run, developed market OEMs probably have only two workable responses: niche growth
(eg ABB in transmission, Areva and Toshiba in nuclear, GE in gas); or tactical retreat – to stop trying
to compete in large parts of the OEM market and instead focus on unlocking the maximum potential
for MRO (maintenance, repair & overhaul) revenues from their installed bases.
With this report we extend the analogy and consider the state of play amidst the ongoing global recession
and ahead of the important UN COP15 climate change conference later this year. Five to 10 years ago,
western power tech OEMs were enjoying their Austerlitz (the 1805 battle usually cited as Napoleon’s
greatest victory) in the shape of a North American demand boom. From that they have run smack into an
ugly Borodino (the savage battle seen by many as the beginning of the end for Napoleon’s Russian
campaign of 1812) in the form of a demand boom in the East in which they were almost entirely unable to
participate due to competition from low-cost emerging Asian OEMs. Ahead of the second decade of the
new millennium, during which the West will still be dealing with a raised replacement demand
requirement whilst finally getting to grips with climate change wholesale, western OEMs might have
been expected to bounce back. But after the bloody battle of Borodino, Napoleon’s Grande Armée
reached Moscow in September 1812 to find it abandoned and stripped of supplies…