Siemens: It's convergence, stupid

Siemens: It's convergence, stupid

Synergy was the word Siemens AG used several years ago when it talked about combining its carrier and enterprise network and mobile phone businesses under one roof. Then the company spun off these operations into separate divisions to be able to focus -- it said -- more closely on customers' individual needs. Now the manufacturer is pulling everything back together and the buzzwords are end-to-end systems and convergence.

Siemens Communications Group is the name of a new unit, launched Friday, that combines all activities of the previously separate Information and Communication Networks (ICN) and Information and Communication Mobile (ICM) units, the Munich-based manufacturer said in a statement. The new group will be subdivided into three segments: carrier networks, enterprise networks and devices, with a total of eight divisions.

Key reasons for launching the integrated unit are to provide customers end-to-end systems, from the core network to devices, and to deliver convergence systems for fixed and mobile networks, public and private networks and multifunctional devices, Siemens said.

The enterprise segment comprises the two divisions enterprise systems and enterprise services, offering businesses a range of real-time systems and applications, such as the presence-based application HiPath OpenScape and the HiPath 800/Surpass softswitch platform, which bridges the carrier and corporate networks.

The devices segment is subdivided into three divisions: mobile devices, customer premises equipment and wireless modules. The divisions offer multifunctional devices for fixed, mobile and wireless access networks.

The carrier networks segment comprises the three divisions mobile networks, fixed networks and carrier services. The divisions provide complete infrastructure, including converged fixed-mobile systems, as well as applications and services for providers of broadband services.

A few years ago, numerous network operators split their fixed and mobile units so they could make initial public offerings of a number of different businesses, according to Anton Schaaf, newly appointed chief technology officer (CTO) of the Communications Group, speaking last week at a news conference during the Broadband World Forum in Venice. Because these operators have meanwhile seen a need to combine these units to prepare for the world of a single, converged IP (Internet Protocol) network, Siemens has decided to realign its business to provide the converged systems its customers are now seeking.

The need to have a strong foothold in the devices market, in addition to networks, is important as a greater level of intelligence is being integrated into devices, according to Schaaf. Not only that, devices will help steady the bottom line as network infrastructure becomes more commoditized, he said.

"Our new organizational structure will help us develop better devices for users in the enterprise and residential space," Schaaf said in an interview. "Because all devices will now be developed within one unit, development will be much more effective, and it will be much easier to come up with the right position in the market place. We won't have to worry any longer about overstepping internal boundaries."

Devices will play an increasingly important role for network operators, especially those in the broadband fixed-network segment, according to Schaaf. "Fixed operators need devices, not only enterprise premises equipment for business customers, but also systems like home gateways for their residential customers," he said. "If operators only deliver the pipe, they don't have end-to-end control, which they really need if they want to bill for features such as quality of service and video on demand."

As for operators delivering a multitude of bandwidth-hungry services, such as video and gaming, Schaaf views Ethernet as an increasingly attractive technology in the metropolitan area network. Siemens is currently involved in a large carrier Ethernet trial in Asia, together with its Korean partner Dasan Networks Inc., he said.

At the broadband event in Venice, the two companies announced their first carrier Ethernet deal in Europe with the Dutch cable operator Casema NV. The cable company plans to offer a "triple-play" services package of voice, data and video.

In Siemens' fiscal year 2003 ending Sept. 30, the former ICN and ICM units posted sales of around Euro 17 billion (US$21 billion), with a workforce of about 60,000 people. The new Communications Group has operations in more than 160 countries.

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