An announcement out from the newly joined Siemens Gamesa Renewable Energy (SGRE) shows the company is making strides toward reconciling overlapping product portfolios after its April merger. 

Siemens Gamesa launched two new turbines, one onshore and one offshore, in a demonstration that the newly merged group is on its way to developing much-needed focus. The two companies joined to create a super-wind company that has access to a wide array of markets, but also a potentially scattered internal strategy.  

“The original companies were competing, obviously, until now, and they both had their own individual product platforms that end up overlapping a lot. Now that they’re one combined group, they don’t want to cannibalize each other's products," said MAKE analyst Aaron Barr. "They’re consolidating their product portfolio to make their branding and their sales a lot simpler for their customers to understand, but also for cost reasons -- they can start streamlining.” 

As part of that focused message, Siemens Gamesa introduced its onshore SG4.2-145, which the company said will increase annual energy production by 21 percent. With a 145-meter rotor, it can be produced at various spec levels between 4 and 4.4 megawatts and has an adjustable hub height. The prototype is planned for this fall, with certification and production following in 2019. 

Gamesa Siemens complemented that offer with an offshore SG 8.0-167 DD turbine with a rotor diameter of 167 meters. The new offshore turbine will up annual energy production by 20 percent. The first prototype was already installed in Denmark and its expected to hit the market in 2020. To fill out its unified portfolio, Siemens Gamesa said it is developing more models with rotor diameters of 132 meters and over 150 meters. 

While the turbine technologies are themselves not revelatory, the company made the announcement under a new philosophical banner, “One Segment/One Technology,” that defines its strategy going forward. By 2020, each sector of the business will be represented by just one technology. 

“The single-platform strategy helps the company to transition to a more focused offer in the medium term by utilizing economies of scale throughout the supply chain,” said CEO Markus Tacke, in a release. 

That’s a big shift for Siemens. According to a MAKE report on the potential merger, “[t]he Siemens product portfolio is one of the most convoluted in the industry,” because of its investment in both geared and direct-drive turbines and a variety of different rotors. The German-based company has installed over 1,500 onshore direct-drive turbines since it began investing significantly in research and development in 2009. 

Those investments will be rendered moot by 2020. As part of its new philosophy, the company will now focus its onshore efforts on geared wind turbines, which have a gearbox that speeds rotation, and its offshore products will focus on direct-drive turbines, which have a more streamlined design. 

According to Barr, the product breakdown will allow Siemens to capitalize on its competitive edge in the offshore market, where it claims 67 percent of the global market and 96 percent of the European market. At the same time, the group will take advantage of Gamesa’s cost-competitive onshore gear technology that MAKE estimates has a simpler design that allows outsourcing of production. In 2016, Gamesa had 8.1 percent global onshore market share.

“Direct-drive turbines do boast the potential for higher reliability and higher efficiency, but these advantages are not enough to overcome the cost penalty in onshore markets,” said Barr. “The reliability advantages of direct-drive turbines are more important offshore, where the cost of [operation and management] is significantly higher.”

The swap in turbine focus isn’t the only shakeup at Siemens. In November, the company announced it would lay off 7,000 employees -- 2 percent of its global workforce -- in a restructuring that pivots away from its gas turbine business. 

Part of the reason for that restructuring was a more dramatic shift toward its renewables business, including wind. In 2016, Siemens held 6.1 percent of global market share among OEMs, and Gamesa held 7.8 percent, according to MAKE. Combined, the two become a serious competitor.

While MAKE writes in its merger report that the global wind market “is splintering as market incentives diminish in mature markets and demand ramps up in a wide variety of emerging markets,” the Gamesa and Siemens merger offers each a strategic entry point into markets dominated by the other. The latest turbine announcement suggests the combined group is sloughing off excess products to put the best forward in each market. 

According to Barr, in sending a clear message on future strategy, the announcement “impacts the technology for both onshore and offshore in a pretty big way, because both of these companies are pretty big players in the market already.”