Siemens pools mobile communications activities in new Group
Effective April 1, 2000, Siemens will pool all the mobile communications activities within its Information and Communications segment (I and C) - from network infrastructure solutions to mobile phones - in a new Group, Information and Communication Mobile (ICM). ICM will handle all the segment's communications terminals (mobile and wired phones, mobile organizers and digital products) and mobile networks businesses. The new Group, which will take over the operations of Siemens' Information and Communication Products Group (ICP), is starting with sales of over €5 billion. Effective April 1, 2000, the Information and Communication Networks Group (ICN) will establish a new division - Enterprise Networks (EN) - to develop and install multimedia network products and applications for corporate networks. At the same time, ICN will found a new company in the U.S. to handle its optical networks business. Service business is also being strongly augmented. The merger with Siemens' IT Service GmbH & Co. OHG will make Siemens Business Services Europe's second biggest complete service provider in the information and communications sector.
In the first four months of the current fiscal year, Siemens' I and C segment posted orders of €8.6 (1999: €8.1) billion and sales of €7.6 (1999: €7.8) billion. When portfolio adjustments are taken into account, all three I and C Groups started fiscal 2000 with strong growth. At Siemens' CeBIT press conference today in Hanover, Dr. Volker Jung, member of Siemens' Corporate Executive Committee with special responsibility for I and C, noted: "Siemens will be setting the pace in the new, rapidly growing mobile communications markets of the future." Jung emphasized that the reorganization within the segment represents an adaptation to changes in the extremely dynamic market for information and communications technology. Siemens will continue to exploit its strengths in order to lead the market in promising trends like mobile Internet and m-business. The Internet has been the engine driving growth in recent years. Mobile business, or m-business, will be the next important development after electronic business. Thanks to its excellent mobile communications infrastructure, Europe has a better starting point than the other regions of the world. Within five years, more than half of the devices connected to the Internet will be mobile, and very few of those devices will be the mobile phones of today. Once the technical challenges have been overcome, electronic business will be replaced, step by step, by m-business. A company's competitive advantage will then lie in its ability to offer the entire spectrum, including network infrastructures for both fixed and mobile networks, solutions and services, and powerful terminal devices. By pooling all Siemens' expertise in mobile communications and the production and marketing of mobile phones, the new ICM Group, headed by Rudi Lamprecht, will be optimally poised to play a major role in this rapidly growing market, projected to total some €30 billion in 2003. By 2003, around 700 million people worldwide are expected to be using mobile Internet applications. Jung foresees a clear competitive advantage over rival European suppliers in this sector.
Siemens' mobile phones business, one of the main drivers of its I and C segment, is growing by leaps and bounds, said Jung. At 11 million units, last year's sales were almost twice those of the previous year. Sales of 30 million units are planned for this year. Next year, Siemens expects to market 60 million mobile phones and aims to have a 10 to 15 percent share of the world market by the end of 2001. A U.S. market launch is planned for 2001. The goal is to be among the world's top three mobile phone suppliers over the long term. In Europe, Siemens was already in the top three in 1999. A further increase in market share - primarily in Europe - is expected after the takeover of Bosch's mobile phone business.
To drive the globalization of its service business, Siemens intends to strengthen its product-related service business in the U.S. market. The planned pooling of all service businesses in Siemens Business Services (SBS) - a Group with nearly 30,000 employees and sales totaling some €5.1 billion - will create one of Europe's biggest complete suppliers of I and C services. Combined with the legally separate entity Siemens IT Service GmbH & Co. OHG, SBS will now cover the entire spectrum of I and C services, jumping from Number Four to Number Two in Europe.
The reorganization is rigorously oriented on four key strategic I and C fields: I and C products, mobile networks and mobility, IP-based networks, and e-business solutions and services. Combining terminal devices with mobile activities in the new ICM Group will make Siemens a pacesetter in the megatrend toward mobile business solutions, a market now in its infancy but destined - within a few years - to match today's e-business market in importance.
The demands on converging voice and data networks are becoming more and more comprehensive and specialized. As a result, ICN will establish its own Enterprise Networks Division (EN) on April 1, 2000. EN will develop and install multimedia network products and applications for corporate networks and private customers. The business is already posting sales of €4 billion in a market where annual growth is expected to top ten percent. With Siemens' newly debuted convergence infrastructure HiPath - exhibited for the first time at CeBIT - voice, data and video are linked by sophisticated software solutions across all network types. The enterprise market has extraordinary growth potential. Today, Siemens already has more than one million customers with over 70 million HiCom and HiNet users worldwide.
Also on April 1, 2000, a new U.S. company, Optisphere Networks Inc., will be set up to further grow optical networks business and technology in the North American market, which currently accounts for some 85 percent of the world market in this sector. Optisphere's sales are expected to exceed €300 million in its first year of operation.
Among the innovations that Siemens is presenting at CeBIT, Jung singled out the new generation of mobile phones and the first of a series of products with converging voice and data applications. With its C35i, M35i and S35i models, all of them WAP-capable, Siemens will make "WAP for all" a reality - a development that will continue and expand the company's success in the mobile sector. Plans call for presenting a new device every four months.
The carrier solutions offered by ICN, a leading global player in key sectors of Internet technology, are based throughout on Internet and IP applications. In the U.S., these business activities are pooled in the Siemens subsidiary Unisphere Solutions, headquartered in Burlington, Vermont. The step-by-step introduction of Internet technology and combined voice and data networks required by conventional telecoms operators presents a vast opportunity. Siemens is offering these customers solutions that migrate conventional telecommunications systems to Internet and converged data networks via SURPASS - a new architecture that provides an evolutionary transition to Internet networks.
SBS is represented at CeBIT by a wide spectrum of e-business solutions for mobile Internet, ranging from scenarios for mobile shopping and mobile booking to mobile banking. In this connection, Jung underscored SBS' key function as an innovative service provider and growth driver for the entire Siemens organization. Siemens is moving into the Internet at full speed. All Siemens Groups are rigorously orienting their business processes on e-business.
Siemens' Information and Communications segment (I and C), with annual sales exceeding €25 billion and some 100,000 employees, comprises three Groups: Information and Communications Networks, Information and Communication Products (effective April 1, 2000: Information and Communication Mobile), and Siemens Business Services. In the first four months of the current business year, segment sales totaled €7.6 (1999: €7.8) billion, with news orders of €8.6 (1999: €8.1) billion. The decline is the result of portfolio adjustments for I and C's four key strategic fields. In the first four months, the segment posted earnings of €400 (1999: €103) million, continuing the trend toward significant growth in profitability.
In the first four months of the current fiscal year (began October 1), orders at Siemens Business Services rose 7 percent to €1.2 (€1.1) billion and sales climbed 29 percent to €1.3 (1999: 1.0) billion.
Information and Communications Products' portfolio was rigorously pruned in fiscal 1999. On a comparable basis, the Group's orders skyrocketed 64 percent to €2.4 (1999: 3.1) billion and sales shot up 60 percent to €2.1 (1999: €2.9) billion.
Orders and sales at Information and Communications Networks were considerably above last year's levels. Orders jumped 33 percent to €5.0 (1999: €3.6) billion and sales surged 18 percent to €4.2 (1999: 3.6) billion.