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2/7/2012
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Siemens Targets North American Unified Communications Market

Siemens Enterprise Communications challenges market leaders Cisco, Avaya as revamped company pushes corporate networking and communications gear under OpenScape brand.

12 Enterprise IT Resolutions For 2012
12 Enterprise IT Resolutions For 2012
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Siemens Enterprise Communications, which has long been a minor player in the North American market, has undergone a restructuring and has aggressively pursued high-profile deals to improve its standing in the market for a wide array of unified communications and corporate telephony technology.

The move is starting to show some results, said Chris Hummel, president for North American operations of Siemens Enterprise Communications. Siemens Enterprise Communications is a partial spin-off from Siemens AG, the German-based conglomerate. Three years ago, Siemens entered into a joint venture with Gores Group, a Los Angeles-based private equity firm; Gores owns 51 percent and Siemens owns 49 percent. At about the same, another part of Siemens AG's communications business that sells to carriers such as AT&T, Verizon, and British Telecom, entered into another joint venture with smartphone maker Nokia.

Siemens Enterprise Communications underwent a restructuring to reverse five years of declining sales, particularly in North America. Its strongest markets were in Europe, which is where the parent company is based, Brazil, and emerging markets in China and India. In North America, Siemens was ranked as low as 8th or 9th place, Hummel said.

"The idea was to turn that around and make the company a growth company while focusing on operational efficiency. Our goal was to turn Siemens Enterprise Communications around and make it a top-line growth company," he said, adding that Siemens was an engineering-driven company but needed to be a market-driven company.

[ What's driving enterprise UC deployments in the age of the smartphone? See UC In The Smartphone Era. ]

Siemens' strategy, he continued, has been to go after new customers, build a stronger ecosystem of channel partners, and to pursue and win much bigger contracts. Hummel said that in 2011, Siemens outbid Cisco and Microsoft for a large state telephony and unified communications contract worth close to $50 million dollars. He did not identify the state.

In 2011, the company grew new orders by 26 percent, making it a business of "nearly a half a billion dollars in the U.S." It closed seven transactions for over $1 million each.

Siemens Enterprise Communications is an infrastructure company providing networking and communications gear for corporate telephony and the emerging unified communications business. Most of its products go by the OpenScape brand name. They include OpenScape Office V3 (new in 2011), an all-in-one UC solution for mobile workers; OpenScape Voice, an OpenScape Session Border Controller for Siemens Voice over IP (VoIP) deployments; and a contact center solution that can be delivered as a cloud service.

Siemens Enterprise Communications apparent success has earned it a place in the all-important "Leaders Quadrant" from Gartner Research, which ranks players in the Unified Communications and Corporate Telephony space. It shares leader status with Cisco Systems, Avaya, and Alcatel-Lucent.

The September 2011 Gartner report notes that Siemens Enterprise Communications has struggled. Its shipments of telephony licenses--a measure of sales--declined by 3.9 percent in 2010 from 2009, during which time its market share fell to 8.1 percent from 9.3 percent. But in 2011, shipments of licenses picked up, particularly in Europe and South America, and the company has offered significant discounts.

However, Gartner cautioned, the cost of renewing support contracts with Siemens can be more expensive than with other vendors. Also, Siemens' North American sales fell by 32 percent in 2010 compared to 2009, at the same time the overall North American market rose by 14 percent. However, that was before Siemens' new restructuring and market approach plan was fully in effect.

"The U.S. market has to be a critical market if we're really going to aspire to be, and continue to be, a global leader and player in the enterprise communications space," Hummel said.

InformationWeek is surveying IT executives on global IT strategies. Upon completion of our survey, you will be eligible to enter a drawing to receive an Apple 16-GB iPad 2. Take our 2012 Global CIO Survey now. Survey ends Feb. 7.

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