Bye-bye Siemens

Siemens name exits telco space. For a while in the early to mid 2000s it had a real crack at the 3G market, in partnership with NEC. But a millstone device business and corporate scandal tarred the brand, before a merger with Nokia Networks saw it live out its life in new hands.

News comes in that Nokia has done the deal to take sole ownership of NSN. Nobody is quite sure what comes next – the company to be run as an autonomous entity within Nokia, or be sold or spun off. Whatever the decision, Nokia having sole control of the business will streamline decision making.

One thing we do know is that the Siemens name will be going. This marks the departure from the telco/carrier networking scene of the Siemens name.

Siemens & Halske Telegraph Construction Company was founded in 1847 to commercialise an innovation in telegraph technology. From those beginnings, by the late 20th century information and communications division of Siemens was always one of the largest in the conglomerate that spanned electricity generation, industrial systems and railway engineering.

Although Siemens Communications became better known for its enterprise and PBX products than its carrier business, 3G meant things were about to change. From 2003 to 2005 Siemens COM won its fair share of W-CDMA (3G) contracts in partnership with NEC – including a clutch of Hutchison 3G contracts in Hong Kong, Italy, Ireland and the UK, Cingular Wireless in the USA and Vodacom in South Africa.

In 2004, mobile networks sales made up 27% of all Siemens Communications revenues, with fixed networks 19% and enterprise networks 19%. It’s worth noting that mobile devices still made up 28% of all the division’s sales.

By 2005, the NEC-Siemens partnership claimed to have more commercial NodeBs deployed than any other vendor. The company also had a similar partnership deal in TD-SCDMA with Huawei, to address the Chinese 3G market. It had moved from sixth to third place in the mobile networks market by 2005, and was actively targetting second place based on proposed Asian market expansion. The company was also one of the first to market with an HSPA-enabled NodeB.

Indeed, the range of Siemens’ efforts is fairly startling to look back on. Although the device business had been sold to BenQ by this point, the company was also active in WiMax, microwave backhaul, policy, charging and core elements, HSPA modules, NFC, Push to Talk – just about the whole range of wireless networking. It took lease of a cruise ship, painted Siemens up the side in 60 foot lettering and parked this monster off the shore of Cannes for 3GSM World Congress.

So when, a year later in June 2006, it was announced that its telco networks business (fixed and mobile) was to be merged with Nokia Networks to form NSN, this was by no means a marriage of unequals with, as some might assume, Nokia the vastly superior partner. Indeed the merger marked the coming together of the strong number two and number three players in the market – combining what would be a united effort to target Ericsson’s leadership.

It was, however, a merger that was soon marred by a background of scandal, as evidence of a major bribery scandal emerged in late 2006, and senior executives stood charged of having operated (or ignored the operation of) a slush fund of EUR1.3 billion for use to win major overseas deals. NSN’s official launch took place in February 2007, with the company inaugurated in April. It also took place just as the rise of Huawei was making itself known in the wireless networking market – indeed the need for consolidation in the market a direct result this new competitor’s arrival and consolidation at the carrier level.

More recent years saw NSN cut back its manufacturing operations in Germany, as part of an overall cost-cutting and operational strategy that has seen the company focus on its mobile broadband asserts and offload many aspects such as microwave, billing and OSS, fixed and enterprise assets. It still retains a presence in Munich, and says that will remain.

Yet, despite that outpost, today’s announcement that Nokia will take full control means that the Siemens name, after nearly 170 years, leaves the telco network stage. Businesses rise and fall in our industry. For a while, this was one of the biggest out there.

This article formed part of TMN’s weekly “Week Ahead” email, sent today, 1 July 2013. You can sign up for future emails here.

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