Siemens unit to cut workforce by 50%

Unify layoffs come as the unified communications market shifts toward software and cloud based products

Unify, a joint venture between Siemens and the Gores Group, will cut 50% of its staff and refocus its product roster away from hardware, following a shift in the overall unified communications market toward software and cloud services.

The company, which announced the massive restructuring on Monday, said it would also boost its channel strategy to work better with reseller partners.

Unify, formerly called Siemens Enterprise Communications, will shrink its workforce from 7,700 to about 3,900 -- half of the eliminated jobs will be from Central Europe. The company will also close offices as it consolidates sites.

Gartner analyst Bern Elliot said it is too early to provide strong guidance on this dramatic change. "Long term it could be a good, perhaps the only, strategy that can work. Short term it will pose challenges to both the company and their customers," he said via email.

Customers who have existing investments in Unify products should wait for clarification from the vendor before making significant additional investments, while continuing their maintenance and support, he said.

The company said the reorganization is needed because the unified communications market has undergone "dramatic shifts" away from hardware-based systems and toward software and cloud based products, leading to "pricing pressure."

"Unify must transform in order to remain competitive, so we are taking these necessary and very difficult steps in order to position Unify to fully respond to the needs of our customers and the marketplace," Dean Douglas, Unify CEO, said in the news release.

The company reaffirmed its plans to deliver a new unified communications platform, Ansible, as a hosted service in October.

Just last week, IDC released the results of its first quarter report on the global video conferencing and telepresence hardware market, where revenue fell 16% year on year, and units sold fell 6.2%.

The drop, according to IDC, was attributable in large part to an increase in cloud and software-based options that often are cheaper and simpler to deploy.

The top three vendors in the market -- Cisco, Polycom and Huawei -- all have had declines in videconferencing revenue in their recent results. Cisco's videoconferencing revenue fell 22.4%, Polycom's dropped 8.4% and Huawei's was down 2%.

Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.

Copyright © 2014 IDG Communications, Inc.

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