The two year old saga of Siemens AG restructuring its telecommunications industry participation is finally concluding with the formation of a Joint Venture with US-based The Gores Group.  The JV will retain the Siemens Enterprise Communications (also known as SEN) moniker.  The Gores Group will own 51% and have operating responsibility.  Siemens AG will maintain a 49% share and a “super-majority” position on board decisions.  As part of the transaction, which is scheduled to close at the end of September, 2008 (coincident with the close of Siemens AG’s fiscal year), Gores Group will be adding two of its current portfolio companies – Enterasys and SER Solutions – to SEN.

So, a previously euro-centric player – Siemens Enterprise Communications – transforms into a US-focused player having UC and Voice, Ethernet networking and Outbound Contact Center assets in its business portfolio.  What does this mean for the emerging Unified Communications space?

First, the future of a major global industry force will be stabilized.  SEN will continue as a separate business and plans to expand its participation and provide a viable future for its large installed base (frequently noted as in third place, world-wide, behind only Avaya and Nortel) and a home for its innovative UC solutions  – the OpenScape portfolio as well as its recent SMB product thrust – OpenOffice. 

Second, during the two-year transition, Siemens product developments have been extremely significant – from the release and extension and transformation of its OpenScape collaboration suite (with some portions of OpenScape’s software being adopted into IBM’s SameTime) to the evolution of its terminal devices (hard and soft phones) and the launch of its innovative professional services – OpenScale.

Third, the operating partner, The Gores Group, has an enviable 30-plus year track record of acquiring companies - frequently divisions of companies whose parent deemed them non-strategic to their core business – as was the case with SEN.  The Gores Group takes a very hands-on role in the operations of its portfolio companies and has a record of success in the technology industry.

Fourth, the US focus of The Gores Group and its contribution of Enterasys and SER Solutions to the JV is logically designed to have significant positive impact on SEN’s position in the important US market and we are likely to see an expanded effort in distribution channels here in North America; especially for the SMB market with OpenOffice and its potential synergy with the Enterasys switching portfolio.

Fifth, Siemens and Gores are each providing an additional investment of 175M Euros each for a total of 350M Euro (approximately $550M) which will make the debt free venture rather healthy at its launch.

While the deal doesn’t close for some 60 days before the new business is formally launched, the announcement should certainly give comfort to existing Siemens customers about their path forward and should certainly make the key competitors (some who will also be cooperating) take note of a re-constituted and likely stronger voice in the North American and Global UC market.