About this blog

News and analysis of developments in the enterprise communication industry and market with primary focus on Europe.

The author aims to tap into ideas, insights and thoughts of the readers to get varied perspectives.

Views expressed in this blog are solely the author's opinion and in no way reflect those of his employer.

Saturday, June 24, 2006

How do you notice great ideas and nurture it to make great products?

Last Wednesday, I went to the Royal Ascot to meet Avanade, yes them and not the queen. However, I did take some pics of the queen when she came in her royal entourage and captured a smiling Princess Sophie.

Well, back to Avanade. This company formed as a 50:50 JV between Microsoft and Accenture can be put in the system integration space. Today, Avanade is 78% Accenture and 22% Microsoft. I was speaking to Mark, who is the Managing Director of UK. While the usual discussion on the market was going on, he spotted 'The Lexus and the olive tree' by Friedman and our conversation drifted towards globalisation.

I asked him, in this globalised world, ideas can come from anywhere. How to you create a system/process/framework to tap those ideas. His answer was simple. He said that Avanade has a colaboraton software with access rights for everyone. Avanade has a incentived program for contributing to the collaboration tool and the incentives are linked to their KPIs. The time spent in contributing is also factored in. Mark said that Avanade has done away with the old model of having an innovation team confined in a building in some corner of the world. I found it prety impressive. Mark has invited me to have a look at their systems. I just can't wait. Will update on what I see.

Monday, June 19, 2006

Why is this happening to Siemens???

Siemens AG has been in business for years. In fact, it remains one of the few companies that have survived the two world wars. Siemens Com is a relatively new entity, a flagship business that was formed to grow and dominate the ICT market.

However, call it the effect of globalisation, market dynamics or poor performance, Siemens Com came under speculation since the parent announced its financial results last year. The results clearly showed that Com, a private unit within Siemens AG was bleeding and affecting the overall profitability. With Siemens announcing their JV with Nokia in the service provider space, the future of Siemens Com came under cloud. Answering a question from the press, Siemens executives clearly stated that they are talking to two potential global partners. I expect some announcement between now and next two months. Of the people I spoke to at Siemens, I think they are more inclined to partner with a strong technology player. The only hint that I can offer at the moment is that the partnership will make the new entity number 2 in global revenues.

Today Siemens Com's enterprise unit makes revenues of around 13.5 B Euros globally, growing at 9% HY 2006 over HY 2005 (Siemens fiscal year is from October to September) in sales and has an operating margin of approx 3%. It employs close to 50000 people and has assets in all continents.

Saturday, June 17, 2006

Google vs Microsoft in mobile market

Enterprise mobility is the name of the game. Every voice vendor worth its name is betting big on mobility, a headache for mobile operators. Another source of headache if the interest from fixed operators to enter the mobile space through backdoor eg. UMA technologies and cheap low power GSM licenses.

However, the main battle is elsewhere. The battle for money and control is raging between Google and Microsoft. Both see this market as important and both want a pie of the business. However, each has its own business model.

Microsoft aims to gain traction from the mobile version of its windows OS, handsets and mobile edition of enterprise software. It also intends to provide middleware and integrate the handsets to enterprise apps. However, Google wants to run a network based search and apps solution on the mobile phone, where advertisers pay for the service. It remains to be seen who finally eats the pie.

Friday, June 16, 2006

My latest briefing-Europe Enterprise Telephony Market Update Q1, 2006

I am taking the liberty to post my briefing that was free to attend. The customer premise PBX equipment market is growing faster in Europe than it did the same quarter last year and I am expecting a surge in growing following a dull year of 2005.

Siemens Com emerged as the market leader followed closely by Alcatel. I attribute Siemens emergence as a market leader to France's poor uptake. Alcatel lost close to 2% due to the very low uptake in the French market.

Another interesting trend is the price pressure. The market seems to emulate vegetable selling as prices continue to drop alarmingly. Last year saw system and line prices drop at an average of 9% and this year, I am expecting it to fall by some 11%. With cost to sale remaining the same or increasing, vendors have to look at new markets to grow their bottomline.

Finally, vendors don't seem to enjoy good financial health in this industry. Nortel reported a 0.4% opearting margin although their gross margin was close to 40%. Siemens Com is a price player today, their operating margin loom at a low of 3%, while Alcatel with its large indirect sales force enjoys a healthy margin of 11%. The highest margin amongst the vendors is reported by Cisco, whose products aren't cheap.

Tuesday, June 13, 2006

New blog


I have started this blog...to share my thoughts on the enterprise communication industry and market. With my background as a analyst with Frost & Sullivan, I look forward to share with you my insights, things I cannot write officially.

See you soon,