They are a household name in Europe, where the word "Siemens" graces everything from mobile phones to refrigerators and vacuum cleaners. However, in the United States, only networking engineers or those in need of business consultants are likely to have heard of the giant German conglomerate, which also makes optical switches and networking equipment, and runs the consultancy Siemens Business Services. But Munich-based Siemens indicated to analysts at a briefing in Seville recently that it has every intention of becoming a name as well known in America in network infrastructure, devices and business services as Cisco and Nortel, Nokia and Ericsson, PriceWaterhouse
Coopers and EDS.
The company employs 850 in the Republic and the North, and had consolidated sales of €336 million in the last fiscal year from all its companies in Ireland, which include security company SSE in Dublin.
In the giant subset of the company that Siemens is now calling its mobile division - a convergent area that includes network infrastructure products, mobile applications software and devices, and that makes up more than a third of Siemens AG - as little as five per cent of income currently comes from the Americas. Germany makes up 30 per cent, the rest of Europe, 40 per cent, and Asia, " a fast-growing market, along with Europe" 25 per cent.
But, says Mr Rudi Lamprecht, chairman of Siemens Mobile Information and Communication, "we have very straightforward goals. We want to be among the top three players [globally]." It also wants to be among the top three providers of broadband access, and Siemens already leads in IP convergence, the melding together of voice and data networks, say analysts. It has also become one of the top five business services companies globally, and executives said it would push Siemens handsets and Internet devices aggressively to get them into the hands of Americans.
Like many older IT firms, Siemens is counting on sheer size and breadth of offerings as a key advantage in an increasingly complex and converging market. Once, nimble, niche-focused companies were the rage and older giants like Siemens, EDS and PriceWaterhouse Coopers seemed out-of-date and too conservative for the fast-paced Net market. But now, when B2C means Back To Consultancies in the post Internet-boom world, the big players are chanting a bigger-is-better mantra.
To that end, Siemens is heavily pushing a convergent vision it calls m-business, or mobile business, which it believes replaces yesterday's passe ebusiness. And not surprisingly, Siemens says it is the only company to offer all the ingredients for m-business under one roof - applications, services, solutions and infrastructure. Rival infrastructure firm Cisco "don't have a clue" about how to pull all these elements together, claimed Roland Koch, CEO of information and communications networks. Likewise in the devices arena, Nokia doesn't have "the full-fledged capabilities" of Siemens, he said.
Such statements were predictable at a company briefing, but the figures support a data-based future increasingly reliant on converged networks, products and businesses. By 2005, 60 per cent of all traffic across networks will be data, according to mobile industry group, the UMTS Forum. By 2003 the world will have 550 million PCs, 260 million devices linked by cable to the Net, and one billion mobile phones, according to analysts Dataquest and CSFB.
Networking technologies such as Bluetooth are around the corner. Executives admit that they are over-hyped so far, but they say analysts predict that Bluetooth will gain 500 million users within two years, which would make it the fastest deployment of any technology ever, surpassing the Internet and cellular phones. Siemens says this is why it is putting 50 per cent of its research and development budget into IP convergence, Koch said, and expects to channel 90 per cent of R&D into the area in three years.
The company also has a €140 million venture fund, which it uses to acquire or invest in companies with complementary technologies - at the moment, primarily in mobile consulting, toolkit creators for the mobile applications market, structure companies for technology subprocesses, and, perhaps oddly, 3D animation (for displaying real estate information over the Web). Siemens places seed money of 2 to 5 per cent into such companies. The company said it is actively looking at potential Irish investments, especially in the wireless area.
All of these subsections fold into Siemens' broader mobile business picture, which is so encompassing that it threatens to become fragmented and confusing. M-business requires "a far more complex structure than your basic wireless structure or even your Internet structure," said Peter Cunningham, director of analysts Input, during a presentation. "There will be billions of sensors connected to the Internet" and a "blurring of lines among these communications [devices]", he said. "When you look at mobile business, it's not an independent business." For end-users, that translates into plenty of applications and services. Datamonitor believes Europeans will be spending €730 per household annually on interactive services by 2003, but several speakers at the briefing noted a major hurdle will be finding services that consumers will be willing to pay for, after years of free services on the Internet.
Consumers will also have a wide choice of devices, and luring consumers to hardware products will require investing devices with emotional draws, said Lamprecht. "It is not a technology game. It's a marketing game. It's what you put on top of the technology that makes the difference," he said. "Close-to-body devices" such as handheld Net access devices and cellular phones are now part of "a fashion environment" - Siemens is already releasing two collections a year and working with fashion designers, he said. As a result, some products have completed their life-cycle in less than a year.
Siemens faces a major challenge in convincing Americans to be as ready to change mobiles as Europeans. But a much greater battle will be to gain the name recognition factor in the US equal to that of the US giants it hopes to unseat.
