& cplSiteName &

Ericsson's Ewaldsson Takes Aim at Telco 'Conservatism'

Iain Morris

Ulf Ewaldsson does not seem like a man facing one of the most daunting tasks in telecom. With his ready smile and lilting Swedish accent, the head of Ericsson's newish digital services business appears unflappably calm. But the company he works for is in turmoil: Following a sequence of earnings setbacks, Ericsson is desperately trying to restore profitability to historical levels without sabotaging its future prospects. That challenge falls heavily on the shoulders of Ewaldsson.

That's partly because of his status within the company. Formerly Ericsson's chief technology officer, Ewaldsson seems to have been instrumental in developing the latest, margin-focused plan, taking charge of strategy back in September. Since March, however, and with Ericsson AB (Nasdaq: ERIC) in plan-implementation mode, Ewaldsson has been leading a new-look digital services business that forms a major part of the IT and cloud division -- one of three big units, the others being networks and media, that Ericsson now operates.

In the Eye of the Storm
Ulf Ewaldsson, the head of Ericsson's digital services business, is calmly trying to engineer a turnaround in 2018.
Ulf Ewaldsson, the head of Ericsson's digital services business, is calmly trying to engineer a turnaround in 2018.

It is the digital services business -- comprising OSS, BSS and core network products -- that mostly interests many of Ericsson's investors. With Ericsson deciding to narrow its focus under the leadership of Börje Ekholm, who became CEO in January, the media business is likely to get sold. Ericsson's commitment to networks, which accounts for about three quarters of company sales, is obviously not in doubt. But analysts have questioned Ericsson's apparent devotion to its OSS and BSS business, which had a torrid 2016. (See Ekholm's Vision of Slimmer Ericsson Lacks Detail & Dazzle.)

Ekholm has effectively ruled out a sale, describing digital services as "strategically important" to the company. Yet a dramatic overhaul is needed, acknowledges Ewaldsson. "In this area we do need to improve the performance a lot," he tells Light Reading during an interview at this week's TM Forum Live event in Nice. "We expect to have a tangible turnaround in 2018 from streamlining the portfolio and investing enough in new systems to make them take off."

It is undoubtedly a big ask. While IT and cloud sales in the recent January-to-March quarter were down just 3% (year-on-year), to about 9.5 billion Swedish krona ($1.1 billion), the revenue decline was about 7% when figures were adjusted for currency effects. Even more troubling was the operating loss, which grew from SEK2 billion ($230 million) in the year-earlier quarter to a startling SEK9 billion ($1 billion). (See Ericsson's Q1 Even Worse Than Feared.)

The overriding problem, according to Ericsson's earnings report, was not an uncommon one in the sector -- the failure of new digital-product sales to offset the decline in so-called "legacy" business activities. Ewaldsson offers a much blunter assessment of what that means in practice. "The telco industry is one of the most profitable in the world and that profitability is safeguarding a certain level of conservatism," he says. "That maintenance of legacy is preventing us from being agile enough to monetize enough."

It is not unusual at trade shows to hear operators criticize the big suppliers for not doing enough to address their needs. If Ewaldsson is having a dig in return at some of Ericsson's own customers, it is not without justification. During a panel discussion at TM Forum Live, Eric Hoving, the chief technology officer of Dutch telco KPN Telecom NV (NYSE: KPN), lambasted operators' billion-dollar investments in billing systems he deems to be unnecessary. Telefónica CIO Phil Jordan echoed Hoving's concerns. "We've made the business complicated and now we need to re-engineer," he said. (See BSS Is BS, Says KPN Tech Boss.)

Want to know more about cloud services? Check out our dedicated cloud services content channel here on Light Reading.

Making that re-engineering as pain-free as possible will be an important starting point for Ericsson. "We are working hard on making simple what is really complex," says Ewaldsson. Beyond this underlying need for simplicity, he is also looking at several opportunities that could be the seed of future growth. The first is around the sort of customer experience management technologies that would allow telcos to function much like over-the-top players. "Customers want an experience that is similar to iTunes. We can see more operators wanting to go there but with so much legacy stopping them."

Ericsson has also been investing in the digital front end-platforms that could eventually provide an alternative to more old-fashioned billing systems for operators such as KPN. With an estimated 2.1 billion subscribers using Ericsson's traditional systems, the Swedish vendor could be in a strong position to help telcos shift customers across. Automation is a further priority for Ericsson as operators continue to look for cost savings.

But if Ericsson really considers OSS and BSS to be "strategic," it needs to think about acquiring some of the innovative digital players entering the market, according to James Crawshaw, a senior analyst with the Heavy Reading market-research business. Takeovers are certainly an option, says Ewaldsson, if they can help Ericsson to be "the partner of choice for customers digitizing their businesses." He is obviously not disclosing details of possible targets, but cites interest in areas including customer experience and revenue management, as well as both analytics and automation. (See Ericsson Eyes Takeovers to Bolster Digital Services Unit and Ericsson Must Hit M&A Trail to Boss B/OSS – Analyst.)

A recently launched "dynamic orchestration" product addresses some of the customer requirements, says Ewaldsson, and provides a taste of what is to come from Ericsson in a 5G-based future. Broadly speaking, it's a service orchestration tool pitched at operators that need to keep managing the old technologies even as they introduce newer virtualized services. Ericsson already has customers, Ewaldsson tells Light Reading, without naming names. "We are using new ways of building systems and it is highly customizable," he says. "We'll see even more of this in future and that's going to change the business model from one-off payments for big upgrades to more of a recurring service model." (See Ericsson Unveils Dynamic Orchestration.)

Next page: Virtualization reality

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Blogger
5/18/2017 | 12:28:47 AM
If Mr. Ewaldsson can turnaround the digital services division the next stop is probably group CEO, never mind trying to crack the enterprise IT market.
From The Founder
The time has come for a telecom app store to save the industry.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Documentaries
Service Provider Panel: Partnering in the Digital Era

5|22|17   |     |   (0) comments

Coopetition has always been part of telecom, but the ecosphere now includes data centers, vendors, apps developers, cloud service providers and Internet content providers. This BCE 2017 panel explores the new attitudes among network operators as to the value and variety of ...
LRTV Interviews
Site Demo: AT&T's IoT Flow Platform

5|19|17   |   04:25   |   (0) comments

At AT&T's R&D center in Tel Aviv, Israel, project leader Eyal Segev talks about the operator's Flow platform and how it helps to prototype IoT applications.
LRTV Documentaries
Agent of Change: A Q&A With AT&T's John Donovan

5|18|17   |     |   (0) comments

Carol Wilson talks with the man leading AT&T's transformation efforts about the challenge of change.
LRTV Documentaries
BCE Service Provider Panel: The New Business Realities

5|18|17   |     |   (0) comments

For virtualization to happen, the telecom industry first has to grapple with key functional aspects of SDN and NFV that need to be universal, such as onboarding of virtualized network functions and federation of software-defined networks.
LRTV Interviews
BCE Service Provider Keynote: CenturyLink

5|16|17   |   22:32   |   (0) comments

Aamir Hussain leads the Product Development and Technology organization at CenturyLink, which includes the company's information technology function. He is an experienced senior technology executive with more than 25 years of proven success in the implementation of global technology operations, operationalization of complex technology, infrastructures and business ...
LRTV Interviews
CenturyLink CTO on Transformation

5|16|17   |   7:43   |   (0) comments

The 50-year-old telco has already gone through several transformations, including every time it made an acquisition, but its purchase of Level 3 coupled with changes in technology and customer expectations necessitates its biggest transformation yet.
LRTV Documentaries
Light Reading Hall of Fame 2017

5|15|17   |   5:05   |   (1) comment

Find out who made it into Light Reading's Hall of Fame this year.
LRTV Interviews
Site Visit: AT&T's Tel Aviv R&D Center

5|15|17   |   09:58   |   (1) comment

Nir Shalom, general manager and VP of application development at AT&T Israel, talks about the key service developments undertaken at the AT&T R&D facility in Tel Aviv and how the team there has adopted new ways of working.
Telecom Innovators Video Showcase
Act on Your Intelligence With Amdocs aia!

5|15|17   |     |   (0) comments

Amdocs CMO Gary Miles explains how communications service providers can seize the AI opportunity with Amdocs real-time digital intelligence platform.
LRTV Interviews
Logtel CEO: Making Sense of IoT

5|15|17   |   09:48   |   (0) comments

Jacques Bensimon, founder and CEO of Tel Aviv-based training and consultancy Logtel, talks about the need to make IoT more than just a buzzword.
LRTV Huawei Video Resource Center
The Challenges of Mobile Banking Implementation

5|12|17   |     |   (0) comments

Kamal Quadir of bKash Limited explains the challenges and needs of implementing mobile banking in the Bangladesh market.
LRTV Interviews
Tel Aviv: A Hub of Innovation

5|10|17   |   07:58   |   (0) comments

Light Reading's Ray Le Maistre and Dan Allen discuss the technology innovation, food and amazing sights they witnessed during a recent trip to Israel.
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
BSS Is BS, Says KPN Tech Boss
Iain Morris, News Editor, 5/16/2017
AT&T's Donovan: Women Adapt Faster Than Men
Sarah Thomas, Director, Women in Comms, 5/18/2017
Verizon on M&A: Who Needs a Cableco?
Mari Silbey, Senior Editor, Cable/Video, 5/17/2017
Standardization Needs Room for Innovation
Mitch Wagner, Editor, Enterprise Cloud, 5/17/2017
WiCipedia: LL Awards, Tech Mom Returnships & How The Post Gets the Ladies
Eryn Leavens, Special Features & Copy Editor, 5/19/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.