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The Siemens Joint Venture: Customer Implications
Change: Things will change, and will change more than less in this case. The Gores group has a track record of getting companies profitable, as Eric Krapf noted earlier today. This is a good thing, since the new SEN joint venture got a send-off investment of less cash ($545 million) than they lost in FY2007 ($824 M at 2007 exchange rates). So there's a lot of pressure to get profitable. This can only come through change. Where should SEN make the changes? The answer begins with Focus.
Focus: Under the Siemens AG banner, it seems that SEN was pressed to serve many masters in many markets. As part of the Gores joint venture, choices can and will be made. Will SEN continue to focus on hosted solutions, as they have been doing with their partnership with BT? Or, will SEN drive to build on their leadership position in Unified Communications with the OpenScape Software suite, which leverages the powerhouse relationships with Microsoft and IBM (read more on this)? Or, will SEN join the rush to the Small & Mid-sized Business (SMB) markets? Or, perhaps SEN can combine UC and SMB with Enterasys to create UC appliances ready for any network (avoiding big Cisco network upgrades)? Or will SEN continue to claw for share in the slow-growth large enterprise IP PBX market, where they are in the cluster of firms that are losing share to Cisco? Likely, we will see SEN pick one, or at most two, of these. These tough choices bring us to innovation.
Innovation: This will be a business innovation, not a technological innovation. Certainly enough examples exist among the IP PBX makers to show that the IP PBX market is not a high growth or high profit market. Even the Siemens press briefing contained this headline on one slide: "SEN has a strong installed base but cannot escape competitive pressure." A non-innovative approach will be to cut the SEN business to the core to try to hold onto fourth place (the ranking in the slides). It is hard to see The Gores Group following that path. So, for business innovations, my favorite is the UC software play, possibly with a version running on Enterasys "appliances", because that solution can be sold to every customer in the market, not just to those who now have Siemens gear and not just those who are shopping for a new IP PBX once every 10 years. And, maybe there's a reason to combine this with the hosted solutions play, to leapfrog past Siemens' weaknesses in sales and services channels. Can you imagine "Siemensforce.com" as a possible repeat of the fabulous Salesforce.com success?
So, back to the customers! For customers who are willing to change, this announcement is good news. For current Siemens customers, they could see extensions to their current Siemens systems (yes, extensions, not replacements) that bring the full power and value of UC to every desktop, mobile device and business application for rapidly-realized ROI. And, if SEN opts for the UC with appliance or hosted approaches, the same value could be available to every other enterprise customer on the planet. Siemens would have to rescind some end-of-support notices, of course, to allow customers to keep what they have. But, heck, this is German technology, right?
I do hope that The Gores Group lives up to their reputation for caring for the customers of their newly acquired portfolio companies and for focus within the operations, since I think this will be entirely to the benefit of customers - both Siemens current base and all the rest. Good luck, SEN as you change, focus, and innovate for your customers.