Siemens storms U.S. mobile market

As many telecom companies bemoan the economic slowdown in the U.S., Siemens AG believes the long-term potential in the country warrants an aggressive plan to increase its market share in the U.S. mobile phone market.

‘The U.S. market is moving toward GSM as the technology for wireless.’
— Florian Seiche, Siemens

Last April, Siemens AG formed the Information and Communication Mobile Group, which includes its wireless network, cordless phone and mobile phone businesses. The company also decided it would invest about $500 million during the next two years to pursue U.S. market share and brand awareness (see timeline).

When Siemens AG entered the U.S. financial scene by trading on the New York Stock Exchange last month, Supervisory Board chairman Karl-Hermann Baumann labeled the U.S. market Siemens' top priority, stating that that it would become “a jewel in our worldwide operations.”

Siemens' market share in Europe continues to surge, but the company believes its mobile products now have a place in the U.S., said Florian Seiche, vice president and general manager, Siemens mobile phones, Siemens Information and Communication Mobile Group.

“The U.S. market is moving toward GSM as the technology for wireless,” Seiche said. “We can bring our GSM background and branding experience to the U.S.”

The company believes its marketing and retail strengths helped it to gain the number-two position for mobile phones in Europe behind Nokia. Previously, it trailed Ericsson until Ericsson decided to outsource production of handsets to third parties.

At the CTIA Wireless 2001 show last month, Siemens demonstrated its first mobile phone for the U.S. market, the S47 dual-mode GSM/TDMA handset. The GPRS-enabled phone will be available by fourth quarter 2001, Seiche said.

“Our assets are recognized by carriers in the U.S., and they [increasingly] will see us as a potential partner over the next four years,” Seiche said.

Analysts seem to agree.

Siemens' U.S. strategy is “built on the backs of strong relationships with carriers such as Cingular Wireless,” said Bryan Prohm, handset analyst with Gartner/Dataquest.

Siemens plans to announce additional relationships with U.S. GSM carriers and TDMA carriers transitioning to GSM, not CDMA carriers, Seiche said.

“In the last year, once GSM started to pick up in the U.S., we decided not to focus on CDMA,” Seiche said. “GSM is so close to our heart, and we feel we can do it successfully.”

Siemens also decided not to make much of the fact its new phones are GPRS-enabled, Seiche said.

“To be successful, vendors must be on time with the delivery of new technology like GPRS and be able to translate the value-add of the new technology to consumers,” he said.

Though Siemens is making headway in new markets, it has felt the effects of the economic slowdown. The company this month cut 2000 workers at three German production sites. Like competitors Ericsson and Motorola, Siemens shed some manufacturing responsibilities to focus on more profitable areas.

“Cutting employees is a short-term reaction to the market. There is a need to be flexible, and it shows that we can react to the market,” Seiche said. “It was a normal action in order to adjust capacity to market demand.”

Prohm echoes this sentiment.

“Job cutting has become more of a standard operations procedure,” Prohm said. “It is a cost-saving measure [that] will not impact the company's moves into the U.S.”

Because Siemens is just entering the U.S. market, it is not affected by the economic slowdown as players already established in the country, Seiche said.

“While there is some slowdown in the U.S., it is not a disadvantage for us because we are not fully in it now,” Seiche said. “We do see the market becoming strong in the long term.”

Siemens mobile handset focus veers stateside

April 2000	April 2000	January 2001	March 2001	March 2001	April 2001
Siemens AG decides to spend $500 million over two years on mobile phone efforts in the U.S.	Forms the Information and Communication Mobile Group	Cingular Wireless will be first to market the company's WAP-enabled, triple-band GSM phone once it is ready at the end of April	Siemens AG begins trading on the New York Stock Exchange to gain more visibility in the U.S.	Announces S47 model, its GPRS-enabled, dual-mode GSM/TDMA handset available in the fourth quarter	Siemens AG cuts 2000 jobs at its handset unit locations in Germany
Source: Siemens AG