Bischoff ready for next move

Bernd Bischoff, chief executive of Fujitsu Siemens Computers, sees signs of an upturn and claims he has the answer to Dell's impact on the market

What's it like being the number three European PC vendor, and number four UK IT company? Not bad, according to Bernd Bischoff, the man at the helm of Fujitsu Siemens Computers (FSC).

He has just passed the 100-day mark in his new post, traditionally a point at which US company chiefs are given a progress assessment.

Bischoff, a former IBM and Hewlett-Packard (HP) staffer who joined FSC in 2001, has reason to be pleased.

Although the European computer market shrank by 33 per cent in the past three years, FSC's turnover declined by only nine per cent over the same period. And while the market contracted by 14 per cent last year, FSC's sales fell by only one per cent.

The icing on the cake is the company's most recent half-year figures. In the six months from April to September 2004, FSC reported revenue of £2.6bn, a 15 per cent increase on the same period last year.

Pre-tax profits increased by 60 per cent year on year. Unit shipments rose by 32 per cent over the period, including a 61 per cent increase in the UK and Ireland.

Bischoff was quietly confident when he spoke to CRN at the vendor's Visit 2004 customer event in Augsburg, Germany. "We are showing healthy growth and we are outperforming the market. This is a very competitive business and we will have to continue to innovate to meet out customers' demands," he said.

He predicted a five per cent growth for the remainder of the year, most of it coming from servers and supporting services, and mobile computing.

While critics suggested that the creation of FSC five years ago would suffer from the lack of a strong brand and the clash of German and Japanese business cultures, Bischoff claims results prove them wrong. He points to the fact that Siemens and Fujitsu have complementary strengths and a better ability to focus on SMEs than their competitors.

In addition, he believes the company is reaping the benefits of being one of the first firms in the industry to develop 'green' products.

He is also keen to stress the company's support for the channel. "We do very little direct, so we are building better trust with the channel than some of the other players. We think that is very important," he said.

Bischoff makes no bones about what he thinks of key competitors. "I don't think the channel is happy about the way HP is behaving in its desire to go more direct. It tried to get more aggressive on pricing but it didn't work. A lot of mid-range resellers now see HP as a competitor," he said.

He has equally forthright views on Dell. "Customers don't want the direct approach," he said.

"They want a relationship with a local reseller. Dell has a 20 per cent share in continental Europe. It won't go any higher than that, so we would be stupid to follow that model. The fact that Dell has call centre support in eastern Europe is not helping. It's just not what customers want."

But he admits that Dell is the model in what he calls "volume business", saying that HP and FSC find it difficult to move to another business model. He is also aware that Dell has been more successful in the UK than in continental Europe.

Bischoff predicted most growth in the somewhat amorphous SME sector. "SME is growing fastest for us and soon it will eclipse our enterprise business," he said.

But he acknowledged that bringing mobile services to this sector has proved harder than FSC expected when it launched Connect2Air last year. "Mobile sales are difficult. It's not totally shrink-wrapped and we have to work closely with ISVs to make it work," he said.

Analyst IDC has reported that Acer and Fujitsu are leading the field in mobile computing. "We have the edge over Acer because we serve the whole market, not just consumers and SMEs. We understand the complexity of selling mobile to large enterprises," Bischoff claimed.

IDC research is encouraging for vendors such as FSC. In August, the analyst reported that European server sales had grown for the fourth consecutive quarter. The x86 server market, consisting of servers with Intel or AMD chips, grew by 26.8 per cent compared with the same period in 2003.

IBM was the leading vendor, with a third of the market, followed by HP, Sun, Dell and FSC. Meanwhile, PC sales this year are expected to reach their highest level since 1999, with 176.5 million units being shipped worldwide.

So what about medium-term growth? Much like IBM, Bischoff sees considerable potential in grid computing, the embryonic technology that links thousands of computers to gain massive computing power. He rejects the notion that the technology is largely the preserve of academic computing.

"We are already seeing commercial benefits and I see no reason why the larger resellers cannot leverage the opportunity this is creating," he said.

Bischoff has taken the helm at FSC at a time when the company is celebrating its fifth birthday along with a half year of growth. He now has to build on this base to convince both the channel and his customers that the company can continue on its upward path.