ANDREAS BERNHARDT. Softphones & Smartphones Voice over BB Muni-Fi-ing America VON Fall 2006 Wrap-Up

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1 voice, video & vision November 2006 Vol 4, No 11 $4.95 Softphones & Smartphones Voice over BB Muni-Fi-ing America Fall 2006 Wrap-Up ANDREAS BERNHARDT CEO: Siemens Enterprise Communications Turning Vision into Reality Over 58,000 Subscribers in 160 Countries

2 Andreas Bernhardt, CEO Siemens Enterprise Communications Jeff Pulver interviews another one of the extraordinary, far-sighted individuals whose efforts have made possible today s VoIP industry. On October 1, 2006, Siemens Communications Group was reorganized into two entities, and Andreas Bernhardt began his new position as Chief Executive Officer of the newly formed Siemens Enterprise Communications company, with responsibility for a 17,000-person global workforce. He is also the Chairman of the Executive Board for the new company, an independent operating entity within Siemens. Bernhardt was born on April 9, 1958, and graduated from the Berufsakademie in Stuttgart with a degree in engineering, specializing in communications technology. In 1983, he started his career at Alcatel SEL as an engineer in the research and development department. It was a good start for someone who had dreams of being an entrepreneur and a desire to convert ideas into great products. Within three years, he was promoted to Project Manager of Research and Development for high-speed transmission systems and subsequently moved through the company working on optical avionics systems and network management. His initial posting provided him with deep technological knowledge to understand new trends and make better business decisions as he moved up the corporate ladder. In 1997, he became General Manager of Alcatel Telecommunications Software and Services in Germany (ATeSS-G). During his tenure, he initiated the acquisition of Telenet GmbH, and integrated ATeSS, Telenet, and the Intelligent Networks product line to create the Networks Application unit, becoming Vice President of the new division and gaining responsibility for its operations throughout Europe, including Russia. By 2000, Bernhardt had been appointed Chief Executive Officer of Alcatel SEL AG Germany. After more than 20 years at Alcatel, Bernhardt joined the Board for Siemens Communications in October He became responsible for all of the company s global enterprise business, as well as all communications business in the Middle East, Africa, and Commonwealth of Independent States (CIS) regions. Outside Siemens, Bernhardt plays an active role in the Committee on Eastern European Economic Relations of the Bundesverband der Deutschen Industrie (Federal Association of German Industry, BDI) and is also a member of the Economic Policy Advisory Board of the state of Baden-Württemberg and the Board of Governors of the Stifterverband für die Deutsche Wirtschaft (Sponsor s Association for German Business). He is married and has one daughter. He loves sailing and enjoys modern art and classical music. Pulver: Your academic training and early career were in engineering. When you were starting out, did you think you would always remain on the technical side, or was business management also of interest? Bernhardt: I have always wanted to be an entrepreneur and you can be an entrepreneur as an R&D researcher by converting your ideas into great products. But, at a certain point, you have to be prepared to move to another level where you have more influence and responsibility. This will inevitably lead you into business management. Starting my career in R&D gives me a deep technical knowledge that allows me to better understand new technology trends and make better business decisions. Pulver: You spent nearly 20 years at Alcatel, climbing MAGAZINE NOVEMBER 2006

3 Photography by Armin Brosh NOVEMBER 2006 MAGAZINE

4 the ladder from an R&D researcher to CEO of Alcatel SEL AG Germany. What enticed you to move to Siemens? Bernhardt: Yes, and I have fond memories of Alcatel, and I m still proud of the achievements in which I was involved. But I was impressed by the visionary power of Siemens founder and by the creativity of the engineers at the company. They were always able to turn their visions into reality. I was particularly impressed with the LifeWorks vision and the HiPath 8000 and OpenScape innovations. I knew that with the proper strategy and go-to-market execution, these could be world-class products and have great market success. I wanted to be part of making these powerful innovations a market success, which is why I chose to join Siemens Enterprise Communications. Pulver: In a partnership with Microsoft in 2001, Siemens was one of the first companies to launch a presence-aware, real-time application portfolio OpenScape. With the benefit of hindsight, were you too far ahead of the market? Even now the concept of presence and managed availability is not widely understood. Bernhardt: If you are committed to shaping the future of the industry by market making, you have to have vision and you have to be able to turn that vision into products. You also need to understand that, in the early stages, you will only reach visionaries and early adopters. But being the first to market does give you competitive advantage; bringing all your market experience to the product enables you to cross the chasm first. In our company, we call this the first mover advantage, which results in both a technological and experiential lead. However, you are right; presence and preference-based unified communications have not yet been widely adopted. Analysts always liked the concept behind LifeWorks our vision for fixed-mobile convenience, unified communication, and collaboration for business communities. In fact, the Gartner Group ranked us as a Leader in Unified Communications two years running, and we have received numerous product awards. Today, we are seeing more and more interest from the customers and, to be honest, we are proud that all of our competitors are adopting our ideas and following our vision. Now we are starting to cross the chasm with OpenScape. Installations now range from small-to-medium enterprises to huge multi-nationals. We have customers doing multi-thousand user rollouts to ASPs in the United States, and large service providers in Asia are offering OpenScape-unified communications as an open, value-added service. It has taken three years, and it will take several more for widespread deployment, but the seeds of success have been sown. Pulver: Considering that early partnership with Microsoft, how do you view the strategic alliance that was announced this year between Microsoft and Nortel? Bernhardt: We thank Microsoft and Nortel for embracing the decision that we made three years ago. We have been working closely with Microsoft since the 90s. Together, we pioneered the idea of presence and preference-based unified communication to overcome communications fragmentation and enrich the user s experience. The Microsoft/Nortel alliance aims to deliver unified communication products and services on a global scale. Siemens already has both in place: a global services organization and a world-class unified communication product portfolio based on our flagship products, HiPath 8000 and OpenScape. Pulver: VoIP disrupted the TDM PBX market. Now there s an upcoming transition away from centralized, proprietary IP architectures based on IP-PBXs. The market is moving toward an open telephony model based on SIP-centric application servers, like the Microsoft Office Communication Server. So, there s less emphasis on hardware and more on software. Are we at one of those famous inflection points? Bernhardt: Definitely! SIP technology is now ready for mass deployment. VoIP has only changed the transport methodology. We believe that communications as a service and unified communications are transformational technologies that are changing the rules of the game. When we introduced the HiPath 8000 as the world s first true SIP-centric voice application server, we immediately got great response from analysts, intense interest from early adopters, and widespread recognition from the industry. While it takes time to develop new markets, the HiPath 8000 open telephony system is taking off, and we have been getting orders from companies around the world. We now have approximately 58 installations, which represents 4.4 million end users once the enterprises are totally converted. We have proven the technology can scale. The carrier version, which uses virtually the same technology, now supports more than one million VoIP over cable MAGAZINE NOVEMBER 2006

5 consumers at CableVision, a New York City area cable operator. The interesting thing is that with this type of technology you do not need to use the rip and replace deployment approach required for traditional TDM and VoIP systems. Instead, you can add users, workgroups, departments, locations, and business partners one user license at a time. And unlike conventional TDM or VoIP systems that issue location-based licenses, the HiPath 8000 uses location-independent licenses, as in the IT world; it works wherever you do home, hotel, home office, or another office. No more buying multiple licenses or new licenses when users change locations. Pulver: Cisco and Microsoft are promoting Unified Communications (UC), which is a standards-driven, software concept where Office Communicator will put a UC client on corporate desktops. Do you see this as a threat to OpenScape or as an enabling development? Bernhardt: It is not an either/or ; it s about co-opetition. On one hand, Microsoft Office Communicator is similar to OpenScape, but OpenScape differentiates itself by offering enterprise class voice communications and is far ahead in the process of embedding voice communications into business communications. At the same time, Siemens has a strong strategic alliance in place with Microsoft. Soon, we will be able to embed the HiPath 8000 SIP telephony capability into Microsoft Office Communicator, replacing the need for a separate soft-client and providing the user with a seamless, integrated, rich experience. Open communications our promise to our customers means that we operate over any network or IT infrastructure, and we can embed communications into any IP-enabled communications device, including Microsoft Office Communicator. Open communications means that our applications use modern software methodologies like SOA and Web Services that allow us to quickly embed voice communications into the IT infrastructure of our customers in a way that is more elegant and more flexible. Open communications means also that we are not locking our customers into one product line. We give them choices. OpenScape offers unified communications, but being open is our differentiator. Unlike most of the competition, OpenScape is telephony system and groupware application independent. Today s version of OpenScape works in Microsoft, IBM, and SAP environments, and we are working to ensure even more openness. Pulver: The company has identified OpenScape and the HiPath 8000 softswitch as key assets, but more is needed to compete effectively in today s market. For example, don t you need systems integration teams and a global service organization as minimum requirements? Bernhardt: We already have an over 5,000-person strong worldwide service organization in place, and we have deployed a number of major unified communications projects in Asia, Europe, North and South America, and the Middle East. We give our customers the choice of buying our products and running them standalone within their existing IT infrastructures, or using managed or hosted services. We recently restructured our go-to-market model and now are putting more emphasis on partnering with system integrators, alliance and indirect channel partners, especially to reach the small to mid-sized customer. We are not only providing leading-edge technology and sophisticated solutions to our customers, but we are looking to strengthen our market position in North America and Asia. MAGAZINE NOVEMBER 2006

6 Our industry is driven by convergence, for example, merging fixed and mobile communications, integrating voice as an application with IT technologies and moving to open communication systems that operate within the IT and mobile infrastructures. We need to be able to run communications as service-on-demand from a centralized data center over any IP network just like any IT application. This convergence forces us to re-think our company s strategy and take steps to secure our customer s trust in their investment in our solutions and services. Consolidation is inevitable, and there will be a first mover advantage. That s why we are proactively looking for strategic partners rather than reacting to our competitors. Siemens Enterprise Communications, for example, is well positioned as an attractive partner that offers innovative technologies, a large and satisfied base of customers, and unparalleled global service capabilities. Pulver: What needs to happen to significantly accelerate the growth rate of enterprise migration to IP? Bernhardt: Open communications is the killer application for enterprise migration. While VoIP market share has been growing rapidly, it s really just been a replacement technology for TDM systems that would have been replaced anyway, and it really hasn t accelerated communication system replacement. Sure, there are some great applications like teleworkers, remote branches, or new locations, but in general, it s been a replacement technology. What s different with open communications is that enterprises will have an OpenPath to new communications possibilities. Open communication systems are deployed Our vision for LifeWorks, that we introduced three years ago, is still valid and has been adopted by virtually all competitors including the cellular industry. like an IT application and operate as a service or application over an existing network infrastructure. This means that the unified communications applications can be deployed one user at a time. There is no need for the location-based rip and replace approach of TDM or VoIP. Gartner is telling customers to lead with unified communications first and VoIP second because they believe the value and transformation user experience are in unified communications. We believe that unified communications requires both an open unified communications application as well as a software-based next-generation voice control or management application. We call our approach to a user-based migration OpenPath. And the entire industry needs simple and easy-to-understand tariff schemes from both mobile and fixed-line operators based purely on IP. This will lead to ongoing price erosion between traditional PSTN carriers and new challengers, and in turn, it will make it more attractive to migrate the enterprise toward IP. For small and mid-sized enterprises especially, we have to break down the artificial barriers to connecting enterprises to the IP network, and we have to provide guidance and clear recommendations. But migrating to IP doesn t make sense for every company. Customizable solutions are still needed that can be tailored to meet the needs of different enterprises, rather than adopting a one-size-fits-all approach. Again, an OpenPath based on the customer s requirements. On the device side, people have to invest in their IP network to support real-time data delivery. As soon as companies invest in real-time data access and other collaboration applications, IP communications can be added in. Pulver: What do you see as your company s greatest challenges between now and the end of the decade? Bernhardt: For Siemens Enterprise Communications, we are committed to being first to market with new technology and promoting open communications to meet the needs of our customers. We need to educate our customers and the market at large about the advantages of consolidation and Siemens unique role as an innovator with consolidation through open communications. Of course, we need to continue to execute on our promise to provide ongoing, innovative, open communications technology that promotes consolidation while driving shareholder value. Part of that strategy will be continuing to demonstrate to the market the ongoing value of our OpenPath approach. The greatest overall challenge is getting the market to understand our vision. Pulver: What do you think communications will look like to the end-user/consumer in 10 years? Bernhardt: Our vision for LifeWorks that we introduced three years ago is still valid and has been adopted by virtually all competitors, including the cellular industry. LifeWorks solves the communications dilemma posed by fragmented and redundant communications, and reduces human latency to accelerate business decisions, processes, and productivity. The next generation of enterprise workers will have a totally different communications and collaboration work style. Our children have grown up in virtual communities with mobile phones, text messaging, instant messaging, and social networking sites like MySpace with 50 million plus users. They will bring their personal communications style to the enterprise world, and they will expect a communications technology that supports their communications skills and behavior. Network elements are a commodity and no longer a point of differentiation. From a technological perspective, the kind of open, IT-based communications that is part of LifeWorks has become widely accepted. Open communications delivers enterprise communications as a service, not as a network element. Unified communications will also fundamentally alter the enduser communication experience and increase productivity by enabling a quantum leap in process efficiencies. And fixed-mobile convergence will become a reality with intuitive and convenient communication devices and clients. Enterprises will evolve toward business communities without today s traditional boundaries. Forward-looking concepts like LifeWorks and open communications will make it easier to connect people instead of connecting devices. That s my vision for the end-user experience in 10 years: intuitive communications for the business world as simple and effective as human speech. Our OpenPath promise and strategy should be seen as a synonym for how businesses can evolve to an open communication and collaboration that empowers business communities to reach their full potential. V This article originally appeared in the November 2006 issue of Magazine. Copyright 2006 Publishing LLC. All Rights Reserved. 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