Ovum: Siemens Industry Analyst Conference 2006

Dan Bieler, Tony Lavender and Peter Hall at Ovum write about Siemens Industry Analyst Conference 2006. The conference focused exclusively on the Siemens Com division. They write that:

For us the most fundamental question, how Siemens plans to address its margin problem at Com, has not been answered sufficiently. Given the scale of the challenges at Com, we would have welcomed greater financial transparency. In light of the absence of more financial details on the various divisions, the impression remains that the restructuring plan is still not fully formulated and that little progress has been made. The details on intended cost savings of €2 billion in the current financial year were scarce. The bulk of savings are to come from procurement. But we remain doubtful whether the division can meet the margin targets set by Siemens' CEO in the current financial year.

Ovum notes that "Enterprise is the division weighing most heavily on the margins of Com. For several years this division has not received the attention it should have been given. Some cost cutting has already taken place and further cuts are planned in a number of areas...Carriers, meanwhile, is facing fewer immediate challenges. Not only were we told that the margins are close to the target for Com already, but the product and service portfolio and the go-to-market strategies are set up to meet existing and emerging market demand. In particular, the migration to next-generation mobile networks and carrier Ethernet should offer new opportunities for the division. Here, Siemens makes good use of the talents of its employees."

Ovum concludes:

Com remains a building site. We are not yet convinced that Siemens has a credible long-term strategy for Com in place. Given the time the company had to work on the task, this is somewhat concerning. The sale of mobile devices to BenQ was just a first step. Further radical steps might be unavoidable. However, a failure to act now will do nothing to resolve the challenges ahead.