November 19, 2011
During its Fujitsu Forum, which was attended by over 10,000 customers and partners, Fujitsu presented itself as a company in transformation from a fairly disjointed business to a more streamlined international business. Fujitsu’s new strategy has three main components:
- Focus on organic growth: Fujitsu is investing more in its sales and services structure as well as its internal IT systems. It aims to get better in what it has already been doing, such as exploiting its large software and hardware portfolio, including smartphones, thin clients, handsets, tablets, mainframes, laptops, and super computers. In terms of services, Fujitsu is pushing its multivendor maintenance capabilities and its IT outsourcing experience. Fujitsu considers its product knowledge and near- and offshore mix a key, unique selling point vis-à-vis its competitors. Given Fujitsu's weak marketing and sales structures of the past, we would believe that it is high-time to improve its go-to-market approach.
- Target emerging markets: The main focus is on Russia, India, and the Middle East. Fujitsu is ramping up local operations and also adapting its go-to-market approaches. For instance, in India it is using its promotion campaign via auto rickshaw on “see-try-buy” basis. Fujitsu’s goal is to double emerging markets sales by 2015 from €800 in 2010. Given its Asian roots, it is astonishing how long it took Fujitsu to realise the opportunities at its doorstep.
- Develop cloud solutions: Fujitsu views cloud purely as a delivery model. Fujitsu approaches cloud as a services business, which needs SLAs including response time, quality of service, and process support. Also, Fujitsu provides multi-tenancy where SMBs enjoy the same benefits of scale as MNCs. Fujitsu also announced its Business Solutions Store, an enterprise app store, which will be launched in early 2012. The service provides third-party developers a neutral platform and is based on a revenue-sharing model, without any upfront cost or rental fee for ISVs. We agree with Fujitsu’s views of cloud as a delivery model, but its first steps look a little uncertain.
Fujitsu is a significant global ICT player. Fujitsu had a turnover of US$55 billion in 2010, US$19 billion of which was generated outside Japan, and a net income of about US$ 660 million and 172,000 employees. The company intends to generate half of its sales by 2015 outside Japan, up from one-third today. Half of Fujitsu’s turnover is coming from services; a quarter from PCs and mobile devices; networks and components accounting for the remainder.
Given this scale, it is all the more surprising how poor brand awareness of Fujitsu is outside Japan. As a sign of its international commitment, Fujitsu transferred the headquarters for its hardware business from Japan to Germany, including all related R&D activities. Fujitsu can already point to tangible progress. For instance, it is running out of capacity in its Augsburg factory, where it had to add night and weekend shifts to meet demand.
But Fujitsu is still underplaying its hand, especially in Europe. In our view, it is missing the “alternative to US-centric IT services providers” pitch. Fujitsu is strong in Europe, given its Siemens heritage. In addition, Fujitsu is making little usage of its Asian origin. It should cater more to both these regions as a “regional” player. Huawei has just announced that it will also pitch to enterprise users and consumers in Europe — via its telco channel partners. As a channel-based business, Fujitsu should take notice of the self-confidence its Chinese neighbor demonstrates in Europe. There is some road to travel for Fujitsu . . .