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November 24, 1995

SCHULMEYER EUPHORIC AT NIXDORF’s PROFIT IN ONE

By CBR Staff Writer

While spirits at Siemens Nixdorf Informationssysteme AG were high after the announcement of its first profit, $43.8m before tax (CI No 2,790), since it was formed five years ago, chief executive Gerhard Schulmeyer says growth was not good enough, and vows to lead the company to far greater market share, outside Germany in particular. Schulmeyer says that in information technology especially, a company will make profits only if it continues to grow. This year’s profits, he said, are already being eroded by price collapses. While he is clearly pleased with the progress made since he took over a year ago – he’d predicted figures in the black before restructuring and achieved them even after restructuring – he will not be allowing anyone to rest on their laurels. He says the company has all the structure and infrastructure in place for consistent growth. It has no excuses for not growing market share. Schulmeyer’s dream is to grow the company to do a third of its business each in Germany, rest of Europe, and the rest of the world. It is currently strongest in its home market, where it claims to be number two behind IBM Corp with revenues of $5,382m compared to IBM’s $6,595m. In Europe also it claims second position, although here it is a lot further behind IBM, with revenues of $7,758m to IBM’s $25,177m. It equates this to 22% of the market in Germany, and 6% in the rest of Europe, which excluding the German contribution, would fall to 2%. In the rest of the world, it admits to falling into eleventh place. The acquisition of Pyramid Technology Corp earlier this year (CI No 2,615) has helped the company’s push into North America, as well as establishing its position in the high end Unix server market.

Product-led

However Schulmeyer admits that Siemens Nixdorf is still weak in Eastern Europe, the Far East, and parts of Europe such as France and Spain. As part of the push abroad, German staff are encouraged to take part in exchange schemes: 50 engineers were sent to Pyramid in Silicon Valley, and Pyramid engineers similarly went to Germany, so that both could experience a different culture. The company sees itself as having three discreet business areas, products, services and solutions. While solutions boasts 42% of the mix, with products taking 36%, Schulmeyer says the business is still product-led, and some of the solutions share should really be attributed to product. His aim is to grow the services and solutions business, and says that this will dictate the company’s acquisition strategy for the future. Although he would not be drawn further on possible acquisitions, Schulmeyer said the parent would definitely make funds available. He also still has big plans for the personal computer business. The 10% stake in Escom AG (CI No 2,511) has added considerable weight to Siemens’ purchasing power, and its aim is to be selling 2m personal computers a year by next year. Last year it sold only 450,000. While it is not giving much away at the moment, it seems we may be seeing Nixdorf personal computers in the UK retail market before too long. In software, Shulmeyer’s re-engineering programme (CI No 2,637) has identified some major overlaps, and he says the company now has a clear software strategy, and will be making some significant announcements in the coming weeks. However, he ruled out acquisitions of software companies in the short term. Services seem to be in the doldrums. Maintenance is falling as customers continue to shift away from high maintenance mainframes, but the network management business is apparently prospering, and the company is winning remote network management contracts. Schulmeyer passionately believes that the cultural change programme he initiated last year (CI No 2,637), in which he opened up the company to the employees to find out from the field what was wrong and where improvements should be made, is now beginning to bear fruit. As well as opening internal lines of communication, the programme also involved Siemens customers, and Schulmeyer says discussing common problems with major customers has revolutionised customer relations, which he says has translated into sales. The results show that it is on the right track now, but the real work is only just beginning.

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