East/west axis in war on clones

“In 1999 the two companies therefore agreed on a joint venture to achieve greater economies of scale in terms of buying power and to capitalise on the established core brands of Fujitsu and Siemens Nixdorf. The result has been the delivery of offerings drawn from the best-of-breed within both organisations,” Wilson says.

The timing of the joint venture was interesting as it came at the height of the dot com failure, he adds. “This forced Fujitsu Siemens to draw up a strategy based on where we saw the IT market going at the time. The main areas identified were mobility, business critical computing and the convergence of technologies.”

Fusing cultures

Though this wasn`t the first alliance Fujitsu entered into – having built co-branded products with UK computer manufacturer ICL previously – the Fujitsu Siemens approach seems to have paid off in South Africa at least. Wilson says that here, unlike in most other markets, a focus on the notebook and high-end server ranges has compensated for a decline in PC sales.

He adds that, in terms of units sold, Fujitsu Siemens is ranked around number five worldwide compared to a position of seven or eight in South Africa. It generates revenue of around R300 million locally.

“I`m extremely positive looking forward, however. Last year we increased our market share from one to two percent and I see no reason why this should not continue. It`s not inconceivable to project sustainable growth of around 20 percent if you have your channels to market right and offer dependable products,” Wilson says.

The new company embodies a fusion of German and Japanese business cultures. Wilson says that while both parents have followed a best-of-breed culture, the joint venture has seen the long reporting structures of the past replaced with a more buoyant approach.

Japanese concepts of information being always available and just-in-time management of pipelines are becoming the order of the day.

“Of course this can be seen throughout the IT industry today, but it is indicative of how the Japanese and German business cultures have combined to enable quick and dynamic decision-making,” Wilson says.

He adds that, as a separate legal entity, Fujitsu Siemens SA has to abide by local rules and corporate governance standards, but stresses that as long as the company business model is adhered to, few inhibitors or restrictions are placed on the company by its parents.

“Our people are of course heavily exposed to our international corporate culture, but when something needs an African solution we are able to produce,” Wilson says.

Partners for partners

At the time of the formation of the joint venture, both the Siemens Nixdorf and Fujitsu operations in South Africa followed a fairly direct model to market. This, however, has undergone a complete metamorphosis and Fujitsu Siemens is now committed to the indirect model.

“When we came together, the challenge was to create a visible branding for the new entity. Both companies had sets of long-standing loyal customers and the first step was to convert these to our channel of corporate reseller partners. Obviously, this entailed going through a lot of pain as far as logistics were concerned, but we believe we have managed the process correctly,” Wilson says.

“Step two was the creation of a retail channel, targeting the Makros of the world. This is important to us, firstly in terms of creating a more top-of-mind brand distribution in the marketplace and, secondly, as a means of letting the public know that high quality Fujitsu Siemens products are readily available.”

The company has settled on Makro as its primary partner in the domestic retail market and, so far, says Wilson, the partnership is yielding dividends.

“Because we bring only leading edge products to market, we tend to be ahead of our competitors as far as price to performance ratios are concerned. We are able to differentiate our products on quality due to the high levels of R&D and quality control at source. This translates into very few unit returns and indirect costs for customers.

“It`s important to note that many of our competitors source different components from different manufacturers, while we manufacture our own. This allows us to turn around products very quickly. Brand protection is paramount at Fujitsu Siemens.”

The company is also able to leverage its relationship with Siemens to broach the major industry verticals, with government and the retail and insurance industries being the major focus.

Turning to the challenges facing a high-tech hardware vendor doing business in Africa, Wilson highlights grey imports and certification in terms of quality and electricity compliance as being priorities – although he welcomes the current clampdown on the latter.

“Add the lead times for delivery from European production facilities, the demographics in terms of support countrywide and into Africa, and unstable exchange rates, and one can see the continent is not for the faint hearted. Fortunately, most South African business people have become astute in dealing with these challenges and take them in their stride.

Two ball games

“With regard to the currency issue, while a falling rand is great for the local economy, in the IT world it means vendors are left sitting on stock that is overvalued. You must remember, however, that when the currency moves the other way, it`s a different ball game altogether.

“We try to put the necessary measures in place to ensure we don`t get burnt too badly. The company follows a model that hedges committed volumes from its customer base, which lessens the risk of currency fluctuations. Our price book is committed to managing the rate of exchange seamlessly behind the scenes.”

The empowerment strategy follows the lead of the parents, and already a number of its corporate resellers are empowerment companies. In addition, Wilson says around 60 percent of the company`s workforce has been drawn from previously disadvantaged communities.

Fujitsu Siemens Computing may be an infant, even in South African IT terms, but it has powerful backing from shareholders who, according to Wilson, recognise the importance of the South African market.

“There`s a clear commitment to invest in South Africa and expand our business opportunities across our different product set here. We believe the merger between Compaq and HP could work to our advantage as they focus inwardly for a time.

“In addition, we are seeing a strong move in the market away from tier two products towards tier one. The trend is against the clones and this can only be positive for us,” he says.