By Rik Turner in Frankfurt and William Fellows in New York
Siemens AG and Fujitsu Ltd have formally rolled out their 50:50 joint venture as Fujitsu Siemens Computers BV which will start trading from a headquarters in the Netherlands on October 1. It will instantly become Europe’s number two computer manufacturer in terms of units shipped, and third overall in terms of revenue. It aims to be Europe’s number one by 2001.
The ambitious plans of the new Nippon-German group were outlined in Frankfurt yesterday by a management team which, as we reported last week (CI No 3,729), will be chaired by group president of Siemens Information and Communication Products Rudi Lamprecht, and not Fujitsu’s Winnfried Hoffmann. Tetsuo Urano, currently joint president of Fujitsu Computer Europe will be vice chairman, while Hoffmann becomes president of the entity’s sales and marketing organization, and Robert Hoog, president of Siemens Computer Systems Division will be president of product management and supply. Importantly, it is Siemens Information CFO Adrian von Hammerstein who will hold the purse strings of the venture as CFO.
The new company, formed from the computer business units of Paderboerner Siemens AG, and the Tokyo company’s European subsidiary, Fujitsu Computers Ltd, has aggressive plans to grow ahead of the market, and take Europe’s number one spot from IBM. It claims the 9,000-strong company will grow 25% from the equivalent of $7.8bn last year to $9.75bn in the first year of operation. At the same time it says it will reduce expenses by 3% to 5% and that ther will be no job losses as a result of the merger. Excluded from the venture are both companies’ services wings, Fujitsu’s ICL and Siemens Business Services, which will continue as direct competitors in the outsourcing market.
No company has ever beaten IBM into second place in any continental market, but Fujitsu Siemens probably stands a better chance than most. Siemens actually knocked Big Blue into the number two spot in the local German market this year with a 26% market share, and taken together, the two companies can boast a massive pan-continental channel encompassing 2,000 major value added resellers, 2,500 sales staff, and 100,000 other smaller outlets. The combined services and integration resources of the two companies is said to add 35,000 IT specialists, plus the 45,000 employees of the two parent companies’ global computing and engineering workforces.
In revenue terms Fujitsu Siemens comes in second in Europe with $6.5bn and third in shipment terms with 2.6 million units in 1998. This year the company expects to move 3.5 million units, and wants to hit the 6 million unit mark in two years time. Underlying this strategy, says Hoffmann, is a 40% annual growth target for unit shipments in addition to the 25% per annum revenue growth target.
To do this on a pan-European basis Hoffman said the new group recognizes that it must do better in the two key country markets outside Germany – France and the UK. Already, he said, the company is expanding its sales channels in these markets, putting in place new PC outlets such as hypermarket chains, together with a major promotion of internet PCs in partnership with the UK’s incumbent telco, British Telecom. It is expected to sell directly from a web site too.
The Netherlands has been chosen to host the new company’s headquarters for tax and logistical reasons, but the company claims its activities will be truly pan-European and will include the development of a comprehensive product portfolio stretching from the laptop to mainframe, and taking in a strong presence in the PC and server domains. Hoog, said the company plans major product launches in the fourth quarter, built around Fujitsu’s UltraSparc II-based GPS7000 Solaris servers.
There was little mention of the second part of the companies’ deal – the merging of Siemens’ worldwide computer units into local Fujitsu operations. They’re likely to report back to Tokyo. Fujitsu Siemens products sold outside Europe will carry the Fujitsu badge.
