swissinfo.ch: Swiss Post Expands in the United States

by Karin Kamp in New York, swissinfo.ch

Swiss Post Solutions, a subsidiary of the Swiss Post organisation, is rapidly increasing its business in the United States and now has offices in most major US cities.

The subsidiary is active in the area that interfaces between physical and electronic post services, offering outsourcing and information logistics solutions.

But not all is going smoothly: Swiss Post faces legal action in both the US and Switzerland from a California-based company, RPost, for allegedly infringing several of its patents on secure emails.

Nevertheless, the company – which first set up shop in the US in 2006 – is upbeat about its prospects.

Dan Moscatiello, CEO of Swiss Post Solutions North America, is clear about what makes it attractive: “Service-oriented professionals trained in industry-best practices, an unbiased approach to technology, and a focus on cost reduction.”

In 2010, the company more than doubled its geographic presence in the US and launched outsourcing operations in nearly 20 new markets.

Most recently, Swiss Post Solutions opened its doors in Washington DC, Chicago and San Francisco.The unit offers a variety of services, such as outsourced mailrooms and call centres, document management programs and secure email.

This year, the subsidiary anticipates it will increase its staff of 1,300 in the US by more than ten per cent.

Profits up
Beyond its obligation to provide basic service in Switzerland, the government-owned Swiss Post is expected to pursue profitable growth opportunities abroad, Mariano Masserini told swissinfo.ch.

“Swiss Post’s board of directors and executive management are considering a potential expansion of the business activities abroad, which today already contribute approximately one fifth to the total turnover,” he said.

Last year, Swiss Post chairman Claude Béglé resigned after only nine months in office, due in part to his controversial plans for aggressive foreign expansion.

Swiss Post Solutions represents a watered down version of Béglé’s controversial strategy of turning Swiss Post into another Nestlé. The service caters mostly for Swiss companies that are present in the US, according to communications expert Matthias Finger, who holds the Swiss Post-funded Chair of Management of Network Industries at Lausanne’s Federal Institute of Technology (EPFL).

“The Swiss postal service never had the financial power and political acceptability to fund major investments abroad and this is not a particularly aggressive foreign expansion strategy,” he told swissinfo.ch. “This service piggybacks on the international nature of many Swiss companies and has followed these firms abroad.”

“Positive operating performance”
Having developed the hybrid business solutions in Switzerland, it made perfect sense to translate them to other markets, he added.

Outside the home market, Swiss Post Solutions plans to concentrate its expansion activities in the coming year on Germany, Britain and the US.

In 2010 Swiss Post Solutions – which has offices in 17 countries – had an operating income of SFr665 million ($755 million), with profits of SFr7 million (figures for the US market were not made available).

Operating income was down slightly from SFr696 million for 2009 but the unit managed to dig itself out of a loss of SFr25 million for 2009.

According to their annual report, the return to profitability was due to a “positive operating performance” and the cessation of one-off costs. The company blamed a strong Swiss franc for the drop in operating income.

Legal troubles
Swiss Post is shrugging off the legal action by RPost, which focuses on Swiss Post’s latest IncaMail service – a secure email service offered by Swiss Post Solutions – as well as previous versions.

RPost claims it has been providing internet users with court-admissible evidence of emails, their content and a timestamp, since 2003 in the US. In 2004, RPost began offering their services in Switzerland.

RPost sued Swiss Post for patent infringement in the US and Swiss Post settled under confidential terms in 2010. The new case alleges that these terms have been breached, forcing RPost to file a lawsuit in California last December.

In January, RPost also requested that the commercial court in Zurich issue an interim injunction against the further sale and use of IncaMail.

“We’ve invested a lot of money over the last ten years into developing innovative intellectual property and services that use that property. We would expect that large commercial organisations would understand and respect the investments that have been made and would look to partner with RPost rather than steal the technology,” Zafar Khan, CEO of RPost, told swissinfo.ch.

“Swiss Post has taken very aggressive action that indicates they do not respect the investments that have been made and the intellectual property that has been developed by RPost and protected with patents in the US and abroad,” he added.

Swiss Post reaction
For its part, Swiss Post says it is confident that the lawsuits brought by RPost will be shown to be unjustified and vowed to defend itself against the issuing of an interim injunction with all the legal means available.

“IncaMail 3.0 is based on a technology whose basic elements are well known, and Swiss Post is confident that it has acted in a correct manner,” Masserini said.

“In December 2010, RPost submitted another lawsuit against Swiss Post in the US, despite an agreement that was in force, without giving Swiss Post the opportunity to comment on the accusations set out in it.”

Masserini added that Swiss Post does not understand the reasons for the action taken by RPost and said customers would not be affected.

Karin Kamp in New York, swissinfo.ch
(With input from Matthew Allen)