This Giant can Dance

Long considered to be a traditional telecom company manufacturing telephone
and infrastructure equipment, Siemens is now gearing itself to be a world leader
in mobile communications — which is what the future is. It is therefore not
surprising to see that Siemens is projecting itself as a company that covers all
components of mobile business — the Internet, mobile communications and
electronic business.

IP is the Name of the Game

Dr Friedrich Froschl, president and CEO, SBS GmbH & Co. OHG

The company has restructured itself into three I and C (Information and
Communication) groups — Information and Communication Networks (ICN),
Information and Communication Mobile (ICM) and Siemens Business Services (SBS).
"The objective is to provide virtually seamless mobility for everyone, in
both business and private spheres," says Roland Koch, Siemens AG managing
board member and president of the ICN group.

In this direction, ICN is pushing its strategic focus on IP-based convergence
solutions and broadband access technology in the area of mobile devices, mobile
network infrastructure and mobile applications. ICN provides integrated voice
and data networks for enterprises, carriers and service providers. Its portfolio
comprises of IP-based convergence solutions, products for broadband access,
optical transport networks and network integration. The group aims at ranking
among the top three in the world market. The focus is on IP convergence
solutions for carriers and enterprises, which make possible an IP-based
integration of voice, data and video; and on broadband access technologies for
extremely fast Internet access. "Our priority is to duplicate the quality
and reliability of today’s telephone networks in the IP world and thus help
build up the Next Generation Internet highway," adds Koch.

A further step towards this goal is to provide high-speed Internet access to
end-users. Siemens claims that it will increase its production of DSL lines
twentyfold–to 2.5 million units in 2001.

Success seems to be knocking at Siemens doors. The company recently signed
major contracts with Swisscom for convergence solutions and with COLT for Voice
over DSL. They also claim to have bagged 76 orders in 30 countries, from network
operators. Last year, the ICN group did sales worth EUR 11.4 billion.

Beyond Borders

Roland Koch, member of the managing board, Siemens AG and group president of ICN

The ICM group at Siemens offers a range of mobile solutions including mobile
devices, infrastructure equipment and applications. Applications include UMTS
services, such as unified messaging, location-based services and mobile payment.

The company, whose revenues primarily came from Europe and Germany, now plans
to move aggressively into global markets such as the US, South America and Asia.
In particular, in the US, the company wants to spread the GSM standard, where it
currently has only a niche position. In Europe, the strategy will be business
with Universal Mobile Telecommunications System (UMTS) network technology.
According to Rudi Lamprecht, Siemens managing board member and president of the
ICM group, "Siemens has already signed agreements with 11 of 33 mobile
network operators in Europe, and is currently ranked Number 2 among UMTS network
providers."

The ICM group generated a business volume of EUR 9 billion last year, marking
more than a 70 percent year-on-year increase. Along with the market leader for
mobile phones, only Siemens was able to win market share and show even higher
growth rates. Today, Siemens is Number 4 worldwide in mobile phones and Number 3
in mobile networks.

There is Nothing like Solutions

Turning to applications and solutions, the SBS group will focus on electronic
and mobile business with its Internet applications. The company offers not only
the key components for electronic business practices, but is a competent partner
in the area of operational services as well. Solutions have been developed for
applications such as mobile banking and brokerage, mobile travel service and
mobile office; and solutions for mobile sales force applications and mobile
field service are on their way.

Dr Froschl, president and CEO of SBS, wants his business unit to become one
of the world’s five leading service providers in the next three years. At
present the SBS division is small, but Froschl expects that it will get about 50
percent of the I and C division revenues.

Other Aces up the Sleeve

Rudi Lamprecht, member of the managing board, Siemens AG and president of ICN

To keep up with the growing competition from new generation communications
companies, which are faster and more nimble, Siemens is doing things beyond
organizational restructuring. To boost employees’ morale and encourage
innovative ideas and creative strengths, several new programs have been
launched. Its 4P strategy (Portfolio, People, Processes and Profitability) is
aimed at getting more focus on high growth, profitable market segments.

ICN, for instance, will be spending EUR 150 million annually on employee
training. ShareNet, a knowledge management system, will soon be available to all
Siemens employees.

Incubators programs to support innovative projects are being taken up — ICM
will invest more than EUR 180 million by 2003 to promote promising projects. The
focus will be on software solutions and services for emerging standards such as
GPRS and UMTS. These incubators, two of which are being setup in Stockholm and
Munich, will offer infrastructure ranging from seed capital, office premises,
consulting on strategy and legal issues, recruitment support, marketing, and
advertising and PR for their products. The third incubator center might come up
either in the USA or Asia. As per plans, there will be 15 incubatees annually,
totaling 45 in the three centers.

Combining Products and Solutions

The overall strategy of the new age Siemens, which operates in over 160
countries, is to combine products and solutions for the next generation
Internet, mobile networks, and e-business know-how under one roof. With sales of
EUR 26 billion in fiscal 2000, the three I and C groups posted an EBIT of
roughly EUR 1.6 billion, contributing nearly one-third of Siemens’ total
earnings and 35 percent of its sales. These three divisions of Siemens bring
over 35 percent of revenue for the company. Company leaders want, and hope, that
this figure goes up substantially in the years to come.

Ibrahim Ahmad