Siemens focusing on next-gen metro/access

Siemens Information Communications Networks last month hosted a conference ahead of the CeBIT show. CEO and president Thomas Ganswindt highlighted Meryl Lynch figures that showed telecoms industry revenues have fallen 42%, EBIT 79% and manpower 45% between 2000 and 2002.

This was justification for ICN undertaking a company "clean-up". It has just completed "phase one". During 2002 ICN.had sales of EUR9.6bn which led to costs being cut by EUR1.8bn and staffing cut from 54,000 to 37,600 at end-2002, with a target of 34,000 by the end of September. Although Siemens is present in 190 countries, ICN "won't step out of any markets", says Ganswindt.

For fiscal Q1/2003, although sales were down 20% on the previous quarter to EUR1.8bn, new orders were up 4% to EUR1.94bn, giving a positive book-to-bill ratio. "In particular," said a bullish Ganswindt, "US business is close to turnaround and break-even, while the Enterprise Networks business is profitable."

ICN's "rebuild" phase two should carry on beyond the end of 2003. Since customer budgets haven't risen, the company is targeting an increase in market share of top carriers using its worldwide sales and marketing network as well as investing in R&D. Recent new customers include Telecom Italia and Chungwa.

The rebuilding process has involved, at the start of fiscal 2003, reorganising its carrier business into two divisions:

"Carrier Networks", offering technologies and tailored solutions from its Surpass portfolio to help carrier customers achieve cost-effectiveness in their operations; and
"Carrier Service", offering all services relating to network planning, installation, and operation from a single source.

Then a "harvest" phase three will target profitability for the Carrier Network business in 2004 "even in a weak market" through accelerating innovation.

Siemens ICN claims to be: the number-one supplier of TDM voice switching, according to Gartner-Dataquest; the number-two supplier of SDH optical transmission equipment, according to Dell'Oro Group; and the number-two supplier of IP core and edge routing (with partner Juniper), according to Dell'Oro Group and Gartner.

However, the ICN division had "too much capacity in R&D", says Ganswindt, leading to "too many solutions". Consequently, R&D has been reorganised to become more streamlined and its processes more project-oriented. This has resulted in product development time being halved.

As part of its overall restructuring and recovery, ICN is aligning its organisation to focus on Next-Generation Networks, which will consume 90% of its R&D spending. ICN is therefore focusing on the following areas, for which it has brought together all its carrier solutions and services under the SURPASS brand:

Next Generation Switching ("without which carriers will not survive") — SURPASS IPCentrex allows operators to provide corporate customers with a centralised solution that fulfils the function of a PBX. Through IP technology the system lets an internal PC and telephone network be integrated into one network.
Next Generation Access (the "future revenue driver") — the SURPASS hiX platform offers a complete, coordinated portfolio of solutions for voice, data and video access based on a new high-density DSLAM that allows all xDSL variants to be used in one device and flexible expansion to an IP softswitch-controlled access gateway.
Next Generation Optics (additional capacity for more revenue) — the new SURPASS hiT multi-service provisioning platform transports TDM traffic such as voice and leased lines, protecting SDH investment, with WDM capability allowing scaling for higher bandwidth demand, but also transports packet-based traffic such as IP and Ethernet. The hiT's modular structure allows network nodes to be configured as multiplexers, cross-connects etc.

According to Carrier Networks division president Christof Wahl, September will see availability of the first product in the HiT 70xx series, with 70% of the full feature set including statistical multiplexing and RPR for metro access/core and CPE applications, joining the existing 75xx series for long-haul. A second phase about six months later will raise capability from Gigabit to 10 Gigabit Ethernet and add MPLS technology for WANs. A phase about six months later, at the end of 2004, will concentrate on design to cost.

Through process reorganisation, ICN says it has roughly halved product development cycle times, to just five months for the hiT and to just over a year for launch. MT