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Siemens saying good-bye to mobile phones and its staff?
Siemens has been suffering real troubles with its mobile department responsible for users' terminals. The first problems were shaped with the release of the 55th series, then the hardship only worsened and a technological gap got clear with a naked eye. The absence of own 3G developments has turned the company into an outsider on this market. A growing competition in the middle class segment, unstable software in new models made the company's phones undesirable in the customers' eyes. Our resource has started speaking about the company's problems even several years ago and then many considered the information a freak of the imagination, not more. A year and a half ago we wrote Siemens would change the leaders and would undertake an antirecessionary program for overcooking the problems with phones' realization. This information is now confirmed by time and the things we see now. The company's mobile department is not viable and the last CeBIT exhibition has shown it, many European operators have rejected some Siemens' products in a strict way; the reasons were many software mistakes and high prices. The company has already entered the way of restructuring mobile phones department and it resembled preparing to sell it actually. And if all the rumors about the company's attempts of selling the department that appeared periodically for the last five years were wrong then today they threaten to come true.
A whole set of companies from small manufacturers to such giants as Motorola were called the potential buyers of the company. Motorola denied even a possibility of buying the department till the last time and that was told on all the levels. But the treatment has changed when a Korean manufacturer Samsung got very close to the heels of Motorola and the gap between the companies on the global market is minimal now. A cardinal solution is not changing the strategy and forming a product line, since they won't bring the result at the moment. In these conditions buying Siemens is not as bad, since the synergetic effect of the first stage will allow increasing the market share quickly and compete with Nokia, also delivering from low-end rivals. Traditionally, the low-end segment is represented by Motorola's and Siemens' products. Controlling such a department will provide an access to some new markets and clients for Motorola. The unification may take about 2 years and a joint company share will get less than their separate results at this stage. But then after creating a workable structure the company will be able to compete with any rival.
One of the conditions that Siemens announces is saving the brand name or combining it with Motorola. The main role will belong to Motorola and, correspondingly, the phones will carry the names of the company also. And maybe the next name will be Siemens, and may be not. Saving a trade mark without adding the Motorola's name seems logical; since it won't scare away a part of the worshipers (it is the maximum for Siemens and forms about 40 percent). But rumors remain rumors. The thing is they look very real now. One of the indirect confirmations is Siemens workers in various countries started getting the lay of the land looking for a job. Finding similar positions at other manufacturers', the process is not wide now, but that is a matter of time. If the company is swallowed up, the workers will get unemployed, since the company won't need to keep two sale nets and representations. Various valuations indicate about 15 percent of the staff will remain after such a swallow.
The Siemens leaving will tell upon the market negatively even at best, the Russian retail shows buying Siemens' phones against their slow realization even now. Any rumors about the company's fate, the change of the local leaders will tell on the sales negatively and will make the distributors be the most careful, which is right. The companies' that have been developing their business on promoting Siemens' products should reconsider their priorities and draw conclusions. In two, maximum four weeks the official information explaining the department's fate will appear.
Published - 27 April 2005
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