Siemens launches phones amid worries over fraud probe

Siemas has been a global power, analyst said, but the fraud investigation doesn't help matters with a sale

Siemens Communications is announcing a sleek new line of desktop phones, but several analysts warned IT managers to be cautious buyers because the Siemens business unit that sells the gear could be sold and long-term support might become questionable.

Further, the possible sale of all or part of Siemens' interest in the business unit may be tainted by an ongoing criminal investigation into fraud allegations involving several Siemens employees in Germany, those analysts said last week. The employees allegedly skimmed more than US$250 million from Siemens to give to companies outside Germany so they would buy Siemens communication products, according to a Siemens spokesman and German newspaper accounts.

"The Siemens product is good, but any buyer should use savvy, since the future of Siemens is so shaky," said Nora Freedman, an analyst at IDC. "It smells."

Munich-based Siemens AG, the parent company of Siemens Communications, issued a statement Nov. 17 saying it is cooperating with German investigators and has begun an internal audit of its subsidiary's financial compliance system. Siemens spokesman Andreas Schwab said that as many as 10 former and current Siemens communications workers and two outsiders are alleged to have siphoned off at least US$26 million.

About 200 investigators searched 30 Siemens locations in Munich and Erlangen on Nov. 15 under the direction of the Munich Department of Public Prosecution, he said. Investigators conducted the searches after receiving a detailed anonymous complaint in 2005.

Even though analysts said buyers should scrutinize the Siemens business as much as the new OpenStage phone technology, two IT managers said they are planning to test or deploy the phones when they begin shipping in January. Pricing starts at US$295 for the low-end phones. Pricing for the others was not released.

The phones use Session Initiation Protocol technology to integrate wired, wireless and IP communications for desktop call management, push-to-conference functionality and the ability to determine whether co-workers are present, among other features, said Al Baker, U.S. vice president of product and service management at Siemens Communications. A new TouchGuide wheel on the front of each phone somewhat mimics the scroll wheel on iPod music players and offers access to a menu-driven user interface.

Bill Crane, communications manager at Shimano, a bicycle maker in California, said the OpenStage phones "appear to be user-friendly, but until you use them, you're not sure." Having user-friendly phones for 150 employees will save time for users and IT staff, he said. "We spend a lot of time telling people the same things on how to use something, so it helps to have them kind of figure it out."

Crane said he isn't worried about a possible sale of the Siemens unit and such a deal's impact on future support or phone sales. As for the fraud investigation, Crane added that what is alleged to have happened "sounds kind of dumb.... I'd be more concerned about the stupidity of the people involved than its impact on the company's future."

Shimano has been a Siemens customer for 10 years.

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