Siemens Builds Upon Next Generation Networks for Carriers

Business Wire, May 28, 2002

Business Editors/High Tech Writers

MUNICH, Germany--(BUSINESS WIRE)--May 28, 2002

Siemens Improves the Cost-effectiveness of Carrier Networks -

Return On Assets for Carriers and New Technologies for the Next

Generation Network Take Center Stage

By optimizing its portfolio and embarking on a strategic reorientation, Siemens Information and Communication Networks (IC Networks) is responding to the need of carriers and service providers for solutions and technologies designed for an immediate improvement in profitability.

Siemens is concentrating on developing and providing technologies, solutions, and services for its market-leading end-to-end portfolio for building the Next Generation Network (NGN). "We enable carriers both to enjoy a quicker return on assets (ROA) and to establish business that offers long-term profitability," says Thomas Ganswindt, President of the IC Networks Group. An economic analysis, based on the methods and research of the Gartner Group confirms that carriers using the Siemens solutions can cut their operating costs by up to two thirds, increase revenues by some 20 percent and markedly improve the net cash figure.

The study, which employed the methods and research of the Gartner Group to calculate the benefits of the Siemens NGN solutions (for NextGen Switching with Surpass and NextGen Access) for various carrier business models, showed that users could expect faster amortization, improved cash flow and increased sales:

1) The investment involved in the migration from traditional

switching technology to NextGen Trunking with Surpass can be

amortized within two years.

- A 20 percent increase in sales is possible if Surpass hiQ

Softswitches and Gateways hiG with NextGen applications such

as messaging, directory services, conference services and IP

Centrex or Call Control are introduced into traditional voice

networks.

- Cost savings of up to 70 percent can be achieved on the

operating expenditure front if the TDM technology is replaced

by NextGen switching with Surpass.

2) On the broadband access front, the use of innovative NextGen

access solutions (such as VDSL and SHDSL with multimedia

applications), achieving better services for customers, can

double cash flows over the next 10 years, representing an

additional 50 percent in relation to today's figures (Net

Present Value, NPV).

3) Upgrading an existing SDH network for the integration of

Ethernet WAN services can provide a return on investment in as

little as three months by integrating different traffic

streams into a single backbone.

Siemens' aim is to assume a leading position in NGN convergence solutions. This will keep the strategically vital value creation chain for building the NGN fully in Siemens' hands. Base technologies for the NGN will continue to be provided through in-house research and development (R&D) activities.

Annual expenditure on NGN research and development is currently running at some two billion euros. In this fiscal alone, some 260 million euros of this will go into developing Surpass technology for next generation communication networks. Over the coming years it will be plowing an additional nine-figure euro sum in R&D to expand and consolidate its leading position in the area of Next Generation Optics. In doing this, Siemens is acknowledging the key importance of optics as a base technology for the NGN.

Furthermore, Siemens IC Networks has been strategically successful in reorienting its portfolio and gained further strength in crucial areas through numerous portfolio measures. The Siemens subsidiary Unisphere Networks Inc., for example, was recently sold to the US company Juniper Networks, a leading supplier of internet routers. At the same time, Siemens and Juniper Networks concluded a partnership deal bringing together Siemens' global presence and customer base and Juniper Networks' IP product portfolio. This will create a unique offering of Next Generation voice solutions with comprehensive IP routing (core and edge) technology. As a systems integrator with NGN project know-how, Siemens can now offer telecommunications carriers complete solutions with softswitches, gateways and IP routers. This underscores Siemens' goal of assuming a leading position in the global Next Generation Networks market with its Surpass product family.

Siemens Information and Communication Networks (IC Networks) is a leading provider of network technology for enterprises, carriers and service providers. Its comprehensive portfolio comprises IP-based convergence solutions for voice and data (HiPath for enterprises, SURPASS for carriers), a full range of solutions for broadband access (Attane), and optical transport networks (TransXpress). The Siemens Group thus provides complete solutions from a single source for the infrastructure of the Next Generation Network -- optimized for a prompt return on investment and to open up new business opportunities for customers. In fiscal 2001 (year-end 30 September) IC Networks employed 51,000 people worldwide and posted sales of EUR 12.9 billion.