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Siemens Enhances Market Coverage, Signs with Netlink

Siemens Enterprise Communications Group (SEN Group) just announced a strategic global sales and service partnership with Netlink, a fast growing (AAGR has exceeded 100% since its founding) U.S.-based provider of IT solutions. The partnership will extend Siemens' market coverage in 27 countries, with Netlink acquiring SEN Group's product and service portfolio in the agreed upon countries. Existing customers will receive continuity of service while benefiting from the broader portfolio of capabilities that the relationship delivers, according to Mark Stone, CEO and Chairman of SEN Group.Stone said his company is "very excited to be partnering with Netlink, a solutions provider with a rich heritage of sustained growth and outstanding customer satisfaction." He also added that the "announcement signifies another major step forward for SEN Group. It will provide enhanced capabilities to our customers, increase growth potential around the globe and will make smarter use of Netlink and our combined resources. It's a win-win-win result."

The agreement represents $308 million over the SEN Group's fiscal 2008, and includes Netlink's acquisition of the SEN Group's local assets across these countries: Estonia, Latvia, Lithuania, Finland, Sweden, Ukraine, Greece, Switzerland, Turkey, Ireland, Hungary, Bosnia, Bulgaria, Croatia, Slovakia, Slovenia, Serbia, Romania, Singapore, Malaysia, Thailand, Ecuador, Peru, Portugal, Venezuela, Chile and Canada.

Netlink was founded in 1997, and provides professional IT and business process solutions. Their delivery model includes pricing guarantees, called Delta Platform that consists of a proprietary set of processes, systems, pre-built technologies and web-based tools that enable virtually distributed team integration for IT delivery.

Siemens has been making a concerted effort to reduce its dependence on direct sales/service channels by signing up more third party dealers and system integrators. More than two thirds of its global sales are through its direct channel operations, a significantly greater percent than any of its competitors; all of the other leading system suppliers predominantly distribute through third party channels on a global basis. Siemens' US market share decline in recent years has been partly attributable to a reduction in its own direct sales force and less satisfactory market coverage by its third party distributors (see my recent No Jitter article on mid-year market share).

A primary reason Siemens has expressed interest in acquiring Nortel Enterprise Solutions (ES) is potential access to their longtime competitor's large distribution network, especially in North America (one of Siemens' weakest global geographic markets). The NetLink Partnership is a positive step in the right direction to address Siemens' problems in this area. NetLink's many areas of expertise, spanning ERP, SCM, CRM, E-commerce portals, office automation, sales force automation, healthcare, and work flow automation, among others, also meshes very well with the overall Siemens One initiative that includes a wide range of products and services, many not telecommunications-based. Siemens AG, despite selling a majority interest in SEN Group to Gores Group last year, is still a very active and concerned co-parent of the enterprise communications system supplier.