In one fell swoop, Siemens AG’s Siemens Nixdorf Informationssysteme AG has not only given over the manufacturing of its personal computers to Taiwan’s Acer Inc, but the company as we know it is about to be merged in with several of Siemens other businesses to form three new converged telecommunications and IT companies. Under a contract due to be signed by the middle of this year, Acer will take over the manufacturing of all Siemens Nixdorf personal computers on an OEM basis. The Taiwanese company will also buy Siemens Nixdorf’s PC manufacturing plant in Augsburg, Germany. Financial terms of the deal were not given. Siemens Nixdorf confirmed that it will be ceasing all production of its own PCs and handing it over to Acer. The company will continue to market and sell the products, but hopes to benefit from the economies of scale available to a company the size of Acer. It’s not yet clear what will happen to SNI’s Intel-based server business. The Augsburg plant currently produces some 1.4 million PCs a year, employing some 2,000 people, and the company had a 4.6% share of the European market in the fourth quarter of 1997, according to Dataquest figures. However, Siemens Nixdorf, which under chief executive Gerhard Schulmeyer has repeatedly stated its goal of deriving a third of its revenue from Germany, one third from the rest of Europe, and one third from the rest of the world (CI No 2,800), has so far failed to make much of an impact outside Europe. The Acer deal would therefore seem to make a lot of sense, given Acer’s position in the US and Asian markets. It will also give Acer a European manufacturing base. The Augsburg plant is a highly automated plant, and Siemens claims only 5% of the work in producing a PC is now manual, making it cost efficient to maintain the European plant instead of importing from the Far East. Even more significant perhaps, is Siemens AG’s plan to reorganize its information and communications businesses. The German electronics giant says the move has been spurred on by changes in the global markets, in particular by the convergence of computing and telecoms technologies brought about by telecoms deregulation and customer demand for integrated systems. Effective October 1 this year, Siemens three operating units: Public Communication Networks; Private Communication Systems; and Siemens Nixdorf are being integrated into three new groups, all offering integrated I&C or information and communications. The new units are: the I&C Services Group, offering consulting, operation and systems for all Siemens’ customer segments; the I&C Networks group, offering end to end systems for both voice and data networks; and the I&C Products Group, which will develop and market high volume products. These three new businesses will account for approximately 40% of Siemens’ total sales in this fiscal year, with sales of nearly $28bn. Siemens Nixdorf admits that the restructuring is very significant. A spokesperson said the precise details of the merger had not yet been worked out, for example there is no detail on what the new units will be called, or whether the Siemens Nixdorf branding will stay or go. Similarly, the spokesperson could not comment on which staff would be affected or how, but he did confirm that Schulmeyer, whose contract was due to run out at the end of this year anyway, will work on the reorganization and integration of the new businesses, before going to the US to become president and chief executive of Siemens Corp, the group’s US arm, replacing Albert Hoser, who will retire within a year. The company claims it will now be well placed to offer the new integrated IT and telecoms services due to its strengths in both markets. The move effectively puts paid to rumors suggesting Siemens was looking to sell Siemens Nixdorf off if it failed to reach the 15% return on capital which the parent company had set its subsidiaries (CI No 3,290).
