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Siemens Doing Well Globally Despite North American Market Decline

Siemens Enterprise Communications (SEN) Group may not be doing bang up business in North America (see my feature article on first quarter market shares), but they are doing quite well in other geographic areas according to a recent Synergy Research Group report. Siemens is the IP-PBX manufacturers revenues leader in Latin America with 39% market share and in EMEA with 26% market share for 1Q2009. The Synergy Research Group report places Siemens comfortably ahead of Alcatel-Lucent (18%) and Avaya (17%) in the EMEA market and more than double their closest competitors in Latin America, Avaya (19%) and Nortel (11%). This is the third consecutive quarter Siemens has been atop the IP-PBX market in these regions in industry analyst reports, according to the company's press release on the recent market share results.Siemens global success outside North America is due in no small part to their very strong direct sales/service presence in the two geographic markets where they have long-established customer relationships. Strong local presence is one of the company's major competitive advantages, although it is not sufficient to compete effectively in the vast, highly competitive North America market where size and scope of indirect distribution channels are major success factors. During the past decade or so Siemens has downsized its North American operations while its principal indirect distribution channel, Norstan Communications, began marketing and installing more competitive solutions (Cisco and Nortel, among others), especially since its acquisition by Black Box. Siemens' interest in acquiring Nortel's Enterprise Solutions (ES) unit is to gain access to more sales channels to compensate for its somewhat limited market coverage in North America.

Cisco and Avaya are currently battling for global market leadership among IP-PBX system suppliers, but outside of North America the two leading suppliers are Siemens and Alcatel-Lucent. Unfortunately for Siemens and Alcatel-Lucent, North America is still the largest single geographic market for IP-PBXs and advanced enterprise communications applications, and they both need to concentrate more resources, such as personnel and finances, to be credible competitors here. Siemens has a much larger North American installed base than Alcatel-Lucent, but needs to quickly migrate customers with aging Hicom/HiPath systems to its current generation OpenScape UC Server platform before the competition attempts to step in as replacement system suppliers. Alcatel-Lucent's recent strategic partnership with HP may significantly boost its North American presence, but it must provide the marketing and services support it has lacked since re-entering the market almost ten years ago. Both companies must show more muscle in North America if they are to remain competitive on the global stage.