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Siemens Layoff Announcement

As it changes to a software provider, SEN [Siemens Enterprise] will give up its own manufacturing operations. In Germany, plans call for the SEN plant in Leipzig, which currently has about 530 employees, and the telecommunications cable business, with some 60 employees, to be sold or funneled into solutions involving a third party. In addition, SEN is seeking a partnership with an IT provider for around 570 employees involved in direct sales to customers for small and mid-sized systems. This move would enable this sales channel to offer an expanded product portfolio in the future so that customers get all solutions from a single source and enjoy greater benefits. Reinhard Benditte, head of business administration at SEN, noted: "All of SEN's competitors rely almost exclusively on indirect sales models, which gives them far greater flexibility and a substantially more favorable cost position."

This positive spin isn't necessarily at odds with the interpretation offered in earlier New York Times reports, which positioned the moves as a step aimed at facilitating the long-anticipated sale of Siemens Enterprise, which was spun off from the parent Siemens company a year and a half ago. Pretty much from the start, Siemens has been the most aggressive "traditional" voice player when it comes to recognizing the role of software in the business going forward and crafting a response to this trend. Getting rid of manufacturing and moving to indirect channels for SMB sales certainly would be consistent with these trends--as well as making Siemens look more attractive to a potential acquirer.