Advertisment

Ovum on Fujitsu to buy out Siemens’ stake

author-image
CIOL Bureau
Updated On
New Update

NEW DELHI, INDIA: Fujitsu is to acquire Siemens’ 50% stake in the Fujitsu Siemens Computers (FSC) joint venture for €450 million. FSC was established by the two companies on 1 October 1999 and brought together their European computer businesses. From a Fujitsu perspective on IT services, the buy out makes a lot of sense.

Advertisment

FSC has a successful support services business that already shares Fujitsu’s own extensive field force, and we would expect to see the unit, which has a number of large managed services clients in the UK and Germany, folded into Fujitsu Services at some point.

Following is a new comment from Ian Brown, senior analyst at global advisory and consulting firm Ovum.

Fujitsu is to acquire Siemens’ 50% stake in the Fujitsu Siemens Computers (FSC) joint venture for €450 million. FSC was established by the two companies on 1 October 1999 and brought together their European computer businesses. From a Fujitsu perspective on IT services, the buy out makes a lot of sense. FSC has a successful support services business that already shares Fujitsu’s own extensive field force, and we would expect to see the unit, which has a number of large managed services clients in the UK and Germany, folded into Fujitsu Services at some point.

Advertisment

In a global economy, consolidation is key

FSC developed a range of European-designed PCs and industry-standard servers, and re-sold Fujitsu’s proprietary SPARC/Solaris Unix servers. Primarily operating in the European market, FSC had arrangements with Fujitsu North America to sell its PCs and x86 servers in the US market, but it has never been a comfortable relationship and Fujitsu has never become a leading PC or server vendor outside of Japan and Europe – the latter through FSC.

The Fujitsu-Siemens brand meant nothing to US customers (FSC couldn’t sell there directly) and even under the plain Fujitsu brand the PCs and x86 servers have struggled to make an impact in the key North American market. By acquiring the Siemens stake in FSC and bringing the European computer vendor wholly under its own control, Fujitsu is now in a better position to build a single, global IT hardware business, designing, manufacturing and using suppliers in locations where it makes most economic sense.

Advertisment

We’ve criticised Fujitsu in the past for not being enough of a joined-up, global company. Many of its constituent parts bear the imprint of their heritage: Fujitsu Services, for example, grew out of UK vendor ICL, which had close ties with the UK public sector and still owes much of its success to that business; Fujitsu North America grew out of the Amdahl mainframe and Sun reseller business, but again has ploughed an independent furrow.

Although it had pretensions to expand outside of its Europe, Middle East and Africa (EMEA) marketplace, FSC has been the epitome of a geographically constrained organisation.

With this announcement, Fujitsu effectively has one global IT hardware brand and is better placed to act as one global product supplier. Can it do the same with its services offering?



It’s not just about hardware

FSC’s stated strategy is to become the leading IT infrastructure provider in Europe, and that means both products and services. But while FSC has built up an impressive roster of European enterprise clients for its managed services offerings, it has been somewhat constrained by the need to hand off clients to either Fujitsu Services or Siemens Solutions and Services for outsourcing and project services deals.

Advertisment

It seems inevitable to us that FSC’s Product Related Services (PRS) division, which it acquired from Siemens Business Services (as it was in 2006) and which has built up a successful managed services business in Europe, particularly in the UK and Germany, will be brought into the Fujitsu Services fold – although FSC’s management denies that this is the intention.

However, it would make sense from a service delivery perspective, in terms of scale (Fujitsu Services would get to seem more ‘European’, with some significant German enterprise clients), in terms of getting rid of duplication and in terms of the complementary nature of Fujitsu Services’ and FSC PRS’s current strengths.

But with FSC PRS now branded ‘Fujitsu’, what does that mean for the Siemens IT Services business?

While Siemens IT Services has always been a standalone business and doesn’t rely on FSC to bring in new business, it does now appear as something of the IT ‘orphan’ among Siemens’ business portfolio. Although Siemens portrays SIS as playing a partnership role within the wider Siemens Group, we think Siemens will seek to shed this last connection with the IT business within a year.

So although the acquisition of the Siemens stake in FSC looks at first glance like a hardware vendor issue, we think it has wider ramifications for the IT services landscape too.

tech-news