Changing times are requiring some infrastructure vendors to reorganize their businesses and better align themselves with their customers.
Siemens AG of Germany is the latest vendor to realize this. The company’s New York subsidiary, Siemens Corp., announced last week three new business units in the United States, a result of the largest reorganization in Siemens AG’s 150-year history.
Siemens has moved its wireless communication products into a new business unit called Siemens Information and Communication Products L.L.C. The unit includes communication devices, computer systems, banking systems, communication cables and information technology services. Siemens Information and Communication Networks Inc., which moves the wireless infrastructure business with the wireline business, will serve enterprise and public network service-provider markets, while Siemens Business Services L.L.C. will act as “the catalyst that customers rely on for delivering the promises of convergence throughout the network of Siemens Information and Communication business units,” said Walter Gerdes, acting president and chief executive officer of the business. The division will be dedicated to consulting and implementation services systems integration and outsourcing for business customers in the United States, Mexico and Canada.
Roy Gunter, vice president of business development and sales with Siemens’ wireless division, said Siemens will increase research and development in the U.S. wireless arena by 25 percent.
Analysts say Siemens’ move reflects a change in the way vendors need to conduct business, as their customers begin to shift toward a one-stop shopping concept that will allow them to offer an array of multimedia and telecommunications services.
AT&T Corp. is in the process of structuring a new consumer marketing organization by next year that will offer packages that include long-distance, wireless, Internet and cable services. Other telecommunications providers are making acquisitions and changing company structures to position themselves to offer similar services.
Wireline and wireless technologies also are converging.
“Traditional telecom segmentation has been by delivery method,” said Brian Cotton, research director with Frost & Sullivan in Mountain View, Calif. “As technologies converge, the traditional distinction between delivery methods is starting to break down, and you potentially exclude customers … Reorganizing better addresses customer needs in a converging environment.”
“What we’ve seen is a shift in the market,” said Crispin Vicars, analyst with the Yankee Group in Boston. “There is a general move to put infrastructure in one group and corresponding terminal businesses in another group to leverage technologies … This aligns them more closely with the operator bases they are working with.”
Gunter agrees. “We understand that convergence is happening, and we have to be prepared for it … We’re looking at [intelligent networking] and how that plays into wireless/wireline convergence,” he said.
Sweden-based L.M. Ericsson recently announced it would divide its operations into three business segments: Network Operations, Consumer Products and Enterprise Solutions. Ericsson said the reorganization will allow the company to offer products based on customer demand.
Poor economic conditions around the world also have led to vendor reorganizations. Suffering from poor financial results since early this year, Motorola Inc. this summer announced a restructuring plan and realigned its communications-related businesses into a single organization. Northern Telecom Inc. is streamlining businesses and laying off 3,500 employees. Analysts say a global slowdown in growth is ahead for vendors as they battle with soft economic conditions around the world.
