Siemens Global Business Ecosystem (GBE)

1. Siemens GlobalBusiness Ecosystem (GBE) Jose C. Lacal Product Manager, OpenSource Applications Jose.Lacal@icn.siemens.de

2. Table of Contents • Jose C. Lacal • Global Business Ecosystem Definition • Plan of Action: the “Sea of Business” • „Competing for the Future“ • Market Potential Pyramid • Open Standards = Open Software + Open Hardware + Open Networks • Create Your Own Future • „Virtualize“ Siemens Assets, Core Competencies • Sample Open BoIP Products and Services • Open Source Value Creation

3. Jose C. Lacal • 1986 - 1994: First business at age 21. • Founder, President of industrial bakery in Miami, FL. • In charge of 40 employees, Sales, Customer Care, Marketing. • 1995 - 1996: First ISP in SE Mexico. • Founder, investor and Chief Vision Officer. 10 employees. • Introduced the Internet culture to this area. • 1995 - now: founder of 02 Open Source start-up ventures. • 1997 - now: • Siemens ICN Boca Raton. Customer Service engineer, daily contact with large telco operators in the US and worldwide. • Munich: Open Source, developed „Business over IP“ • I know business, I know telcos, I know Open Source.

4. Reality Check • Value created in the IP market since 1984: US$_____ Billions Percentage of such value to Siemens? _____% • More of the same actions = more of the same results. • Amazing that young people, who live closest to the future, are the most disenfranchised in strategy-creating exercises.

5. Global Business Ecosystem Definition • No company is large enough to survive and prosper alone • Characteristics of a GBE: • A group of independent entities (partners, internal companies, external members) and individuals, geographically unbounded; • that share a common vision of what the future should look like; • and that join forces (temporarily and voluntarily); • to make that future happen in their own terms. • Cisco, Intel, Microsoft, Nortel nurture their ecosystems • Business ecosystems: • adapt and adopt • compete • evolve • grow or die together

6. Plan of Action: the “Sea of Business” • Siemens as an aircraft carrier “task force:” provide support logistics to thousands of airplanes (startups, associates). All types: long-range reconnaissance; fighters; bombers. Future Opportunity Island 01 Past Opportunity Island 01 Future Opportunity Island 02

7. Competing for the Future • Envision new markets: strategic purpose • Establish the market: set standards • Lead those markets • As a result: • we drive perceptions, we make the rules => Trendsetter • create a new global business ecosystem with ICN at the center • Continued reactive planning ensures: • shrinking market share • diminishing mind-share • shrinking market (stock) value • become an economic dinosaur

8. Market Potential Pyramid

9. Where is the money?

10. Open Standards =Open Software + Open Hardware + Open Networks

11. Create Your Own Future • With right tools, create alternative futures (Isaac Asimov) • “The future is not what it used to be.” Disruptive, non-linear • Three huge industries in the XXIst Century: • edutainment (education + entertainment) • experiential tourism • safety / security • Three massive societal changes in the XXIst century: • rise of the Third Age • transnational companies = global clans • more humans per square meter • Common thread along all outcomes: I & C technologies.

12. Forces Siemens’ Unique Assets Courses Open Standards Sponsor Open Source Trusted global partner E-Business Integration management Open BoIP Global salesforce Worldwide tax, legal Worldwide certification 130 LCs People Brand name Manufacturing Large system expertise Global distribution Finance expertise Customers Installed base „Virtualize“ Siemens Assets, Core Competencies

13. What is next? • „The basic economic resource -‘the means of production,‘ to use the economist's term- is no longer capital, or natural resources (the economist's ‚land‘), nor ‚labor.´ It is and will be knowledge.“ Peter F. Drucker, „Post-capitalist Society,“ 08. • The ability to exploit the firm's „core competencies“ and strategic assets, the building blocks for new businesses.

14. The new role of the CEO • The notion of white-space opportunities is proving especially compelling for highly decentralized companies such as Hewlett-Packard Co. HP Chairman Lewis E. Platt now believes his most important role in strategy formulation is to build bridges among the company's various operations. „I don't create business strategies,“ argues Platt. “My role is to encourage discussion of the white spaces, the overlap and gaps among business strategies, the important areas that are not addressed by the strategies of individual HP businesses.“

15. What‘s next

16. Global salesforce Worldwide tax, legal Worldwide certification 130 LCs People Brand name Manufacturing Large system expertise Global distribution Finance expertise Customers Installed base Sample Open BoIP Products and Services TeleMed Siemens’ Unique Assets Forces Courses Open Standards Sponsor Open Source Personal CO Trusted global partner E-Business SafeLife Integration management Open BoIP OpenBusiness TeleKnow TeleWork Reinvestment

17. Switch Switch - low margin- low customization - higher margin - higher value ==> higher volume (bigger base) Time Time Initial Sale Initial Sale Open Source Value Creation Traditional Model Cumulative Income Cumulative Income After-market services OpenBoIPModel Cumulative Income - revenue on bigger base - new addon-products and services eroded traditional after-market services

18. Backup slides

19. Introducing OpenSource and GNU/Linux • OpenSource software (OSS) • Freely distributed with source code • Widespread acceptance • OSS is at the heart of the Internet: • Apache ( >65% of all websites) • DNS and BIND (all name resolution) • Perl (behind most CGI scripts) • sendmail (processes 90% of e-mail) • GNU/Linux, best example of OSS: • Beat common Operating Systems (OSs) • Superior stability and usability* • GNU/Linux, fastest growing Network OS * - OS of the year, InfoWorld magazine

20. The numbers behind Open Source • Red Hat: Linux distributor. IPO 30 days ago. US$90/share. • Cobalt: Linux mini-servers. IPO 10 days ago. US$100/share. • Hewlett-Packard: entire business unit only for Open Source; free e-speak (broker system) and mail server software. • Sun Mycrosystems: will release source code of Solaris; free Star Office package; publicly available Sparc64 spec files. • IBM Consulting Group: 300 out of 1,800 are Linux experts. • SCO (Santa Cruz Operation): Linux consulting group. • Microsoft was recently declared a monopoly by a US judge. That will generate a cascade of interest in Open Source.

21. Global salesforce Worldwide tax, legal Worldwide certification 130 LCs People Brand name Manufacturing Large system expertise Global distribution Finance expertise Customers Installed base Virtualize Siemens assets, core competencies Turn around weaknesses Trusted global partner Sponsor OS “geeks” Integration management Slow moving Large size Obsolete mindset Corporate weaknesses Corporate assets Core competencies

22. Example of Global Business Ecosystem Support organizations Open documents Current customers Future customers Siemens Current offerings Join development Future offerings Open interfaces External content providers External developers