Ericsson – growth in a changing ICT world

I attended Ericsson’s North American industry analyst day and was pleased to see their progress in transitioning themselves into the new world of mobile networks where apps ultimately drive the change. They're also getting ready for 5G networks.

As most readers are aware, mobile networks are making a steady march toward ever faster speeds even in the current 4G generation. There are 800 million subscribers on LTE in 2015, experiencing 80% subscriptions growth. And video is generating half of all mobile traffic. The question is how this change affects businesses that utilize this platform as well as vendors like Ericsson, which already manages 1 billion subscribers, supports 2.5 billion subscribers, and has 118,000 employees. Change at this scale is actually a daunting thing to manage.

Ericsson has traditionally been perceived as a telecom equipment vendor, but they have made a significant transition to become a ICT (information and communication technology) provider where approximately two-thirds of their revenue comes from services and software. They compete more with ICT vendors than traditional telecom vendors. It’s actually ranked 5th on the list of the top global software companies.

Topics: Networking Ericsson Enterprise Mobility

Nokia buys-out Siemens: is Network Functions Virtualization driving an equipment vendor market metamorphosis?

Today, Nokia announced it was buying-out its telecom equipment manufacturer (TEM) partner Siemens AG for about US$2.2b, reported as a good deal for Nokia and part of a Siemens refocusing on higher growth industrial markets. Unlike Nokia and its handsets, Nokia Siemens Networks (NSN) has been profitable since downsizing last year, but the joint venture didn’t get any takers when shopped to private equity firms (who likely tried to first shop it to the likes of Cisco, HP and/or Oracle). NSN was formed in 2007 and has about 60,000 employees focused on keeping people connected in over 150 countries world-wide. Last year, NSN sold it optical fiber business to Marlin Equity Partners and fixed broadband access assets to Adtran. Siemens Enterprise Communications still holds a big stake in Enterasys, an enterprise networking player formed from Cabletron.

Primarily a mobile broadband player, NSN is a leader in 4G/LTE mobile radio, following Ericsson and followed by Huawei and Alcatel-Lucent (who announced their ‘Shift Plan’ two weeks ago) in average share. Huawei’s critical network infrastructure equipment traction has been slipping in some developed nations due to unresolved security concerns, giving NSN and others an opportunity to maintain current radio equipment margins. And the tide continues to come in for 4G/LTE global network build-outs, raising all ships. But more cost-effective network scaling is needed to support more bandwidth without more revenue from end-users, and virtualizing/automating what can be appears to be the key for network operators.

Topics: Cisco IT Infrastructure Networking HP mobile Oracle Huawei Adtran Ericsson Alcatel-Lucent