Siemens 2006 Annual Report Download - page 105

Management’s discussion and analysis 101
In the Power business area, China’s fast-growing economy continued to drive global
demand for fossil power generation and transmission systems, followed by rising power infra-
structure needs in the Middle East and the CIS countries. In the U.S. and Europe, concerns
about rising energy costs and security of supply continued to stimulate investment in alter-
native power generation.
In the Transportation business area, Asia-Pacific’s growing economies and concentration
of population in cities continued to increase demand for urban transit solutions. In contrast,
rail infrastructure investment slowed in Europe, particularly in Germany, which is preparing
to privatize its national rail service. Growth in the global automotive industry also slowed
despite rapid expansion in China, in particular resulting in volume reduction for original
equipment manufacturers (OEMs). Higher fuel costs stimulated rising sales of hybrid vehicles
in the U.S., and China initiated policy development to address rapidly rising auto emissions.
In the Medical business area, aging populations and increased emphasis on preventative
care in developed countries continued to fuel demand for advanced in vivo diagnostics, such
as computer-aided tomography and magnetic resonance imaging, along with sophisticated in
vitro diagnostics based on immunology. In the U.S. and China, this trend began to meet grow-
ing societal pressure to slow increases in expenditures for health care, particularly for higher-
cost tests and treatments. In the U.S., consolidation and privatization continued in the hospi-
tal market, and advanced healthcare IT systems began to expand beyond the first wave of early
adopters.
In the Lighting business area, Asia-Pacific and Eastern Europe led growth in the general
lighting market, and OEMs continued to shift manufacturing to these lower-cost, faster-grow-
ing markets. Demand also grew for advanced solutions, such as light emitting diodes (LEDs)
and precision components, and for energy-efficient, environmentally friendly products.
Research and development
Siemens patent portfolio consists of about 62,000 patents worldwide, as well as numerous
patent exchange and licensing agreements and patents for technology standards. In fiscal
2006, our researchers and developers made more than 10,000 inventions, an increase of
approximately 17% compared to the prior year. We filed patent applications on approximately
two-thirds of these inventions. In the patent statistics for calendar year 2005, Siemens was
ranked number one in Germany, number two in Europe and among the top ten in the U.S. In
fiscal 2006, Siemens increased R&D, compared to the prior year. In fiscal 2006, Com was con-
tinuously involved in developing marketable components, products and systems, such as for
a new generation of wireless communications technology. Med spent in R&D, particularly to
improve technology and clinical applications for medical imaging systems, such as magnet
resonance imaging, computed tomography, x-ray angiography and ultrasound. R&D spending
at SV was primarily focused on products increasing driver and pedestrian safety, infotainment
systems as well as products for new hybrid vehicles and diesel technology. A&D focused its
R&D activities on manufacturing automation. Osram spent in R&D for miniaturization of
halogen lamps, increased brightness and lower production costs of LEDs. PG’s R&D activities
emphasized gas turbine, steam power and fossil power plant development.
Management’s discussion and analysis