Siemens Enterprise Pushes Software as CEO Works on Sale

Siemens AG’s last telecommunications asset is betting a new name and software offerings will help it compete with Microsoft Corp. and make it more attractive for a potential share offering or merger.

Siemens Enterprise Communications, which is 49 percent owned by Siemens and 51 percent by Los Angeles-based investor Gores Group LLC, today unveiled a new software offering to make it easier for workers to collaborate by combining phone and electronic communications, while announcing the company will henceforth be called “Unify.” Users can use swipe gestures to move conversations from device to device, integrating voice, video, text and remote screen sharing in one user interface.

“We’re putting ourselves in a different neighborhood,” Siemens Enterprise Chief Executive Officer Hamid Akhavan said in an interview. “That neighbourhood is boundless in terms of opportunities, growth opportunities, IPO opportunities, M&A opportunities.”

Siemens Enterprise, which in the past focussed on network technologies and equipment for corporate clients, is positioning itself more closely against Microsoft, whose Lync platform pulls together calls, meetings and documents from its Skype, Office, Outlook and other software. The business will also compete in the so-called unified communications market with Cisco Systems Inc. Akhavan said he can differentiate his software by building in support for applications from Google Inc. and Inc.

Technology Assets

The business represents the last telecommunications investment for Siemens, whose origins can be traced back to the formation of Telegraphen-Bauanstalt von Siemens & Halske in 1847, which built a telegraph line between Berlin and Frankfurt that year.

Siemens, based in Munich and Europe’s biggest engineering company, created the venture with Gores in 2008 as part of a retreat from telecommunications activities. It was until 2007 part of the same division as the operations hived off to form Nokia Siemens Networks, in which Siemens sold its 50 percent stake to Nokia Oyj in July for 1.7 billion euros ($2.3 billion).

“We flirted with an IPO for a couple of years,” Akhavan said. “The market is not at all receptive to it -- it’s a very hostile market in terms of traditional enterprise communications. It’s a shrinking space, and it’s difficult to excite and get proper valuations for the business in a shrinking market space.”

Asked about a potential sale of the company or a combination with a rival, Akhavan said that he’s looking at all options.

M&A Options

“All possibilities are on the table,” he said. “Are we looking at M&A? Every Tuesday. Have I talked to everybody in the market? Sure. Was Siemens planning to stay in this business forever? Of course not.”

Siemens Enterprise, which had sales of 2.1 billion euros in 2012, announced plans to cut 660 of its 4,000 employees in Germany earlier this year. Akhavan said he may consider further restructuring measures. Cisco in August said it’s cutting 4,000 jobs, bringing the total to 12,300 over the past two years.

“By ratio that’s higher than what I have done,” Akhavan said. “And maybe that gives me a little bit of motivation to do more.”

The new communications platform, which until today has been known as Project Ansible, will be more expensive than Siemens Enterprise’s current offerings, which include the OpenScape video, web and voice communications tool. It will be delivered to customers, which include Daimler AG and Ralph Lauren Corp., starting next July, Akhavan said today.

Market Share

Differentiating itself from Siemens, whose products range from x-ray scanners to factory automation, is essential to ensuring the enterprise unit can gain market share, according to Akhavan.

“At the same time as I’m trying to introduce myself as a new company, Siemens has spent a billion dollars advertizing itself as a high-speed train this and a turbine that,” he said. “How do I capture my identity in this noise as who I am?”

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