& 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
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
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 Custom TV

6|27|17   |     |   (0) comments

At ANGA COM 2017, Cyrille Morelle, president and CEO of VeEX, updates Alan Breznick with VeEX's new products and technology. This includes VeSion cloud-based platform for network monitoring, AT2500-3G advanced spectrum analyzer and MTTplus-900 WiFi Air Expert module. He also comments on DOCSIS 3.1 deployment and Remote PHY technology.
LRTV Custom TV
The Overall Objective Is to Win the Game

6|26|17   |     |   (0) comments

SCTE•ISBE's Chris Bastian discusses Energy 2020's success to date and the importance of a flexible approach that allows for changes in specific strategies in order to reach significant milestones.
LRTV Interviews
CenturyLink: Let's Get Past SD-WAN Hype

6|23|17   |   04:02   |   (0) comments

Technology becomes a "shiny object" unless it's properly focused on solving business needs for enterprise customers, says Bill Grubbs, network solutions architect for CenturyLink. He explains to Light Reading why SD-WAN deployments have to be tailored to specific needs – and more.
Women in Comms Introduction Videos
Infinera's Sales Director Paints Tech's Big Picture

6|21|17   |   4:14   |   (1) comment

Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
LRTV Custom TV
SD-WAN Innovation & Trends

6|20|17   |     |   (0) comments

Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
LRTV Interviews
Ovum's Dario Talmesio on 5G in Europe

6|20|17   |   02:16   |   (0) comments

At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
LRTV Custom TV
Putting Power on a Pedestal

6|19|17   |     |   (0) comments

ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
LRTV Custom TV
Gigabit Access: The Last-Mile Pipe for All Future Services

6|19|17   |     |   (0) comments

A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
LRTV Custom TV
Key Factors to Successfully Deploy an SD-WAN Service

6|19|17   |     |   (0) comments

As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
LRTV Custom TV
IoT Solutions: Rational Exuberance

6|19|17   |     |   (0) comments

IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
LRTV Custom TV
Realizing ICN as a Network Slice for Mobile Data Distribution

6|19|17   |     |   (1) comment

Network slicing in 5G allows the potential introduction of new network architectures such as Information-centric Networks (ICN) as a slice, managed over a shared pool of compute, storage and bandwidth resource. Services over an ICN slice can benefit from many architectural features such as Name Based Networking, Security, Multicasting, Multi-homing, Mobility, ...
LRTV Interviews
Ovum's Mike Roberts on 5G Uptake

6|19|17   |   04:08   |   (0) comments

Mike Roberts, research director for Ovum's service provider markets group, explains why he has boosted his 5G subscriptions forecast.
Upcoming Live Events
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Montcalm Marble Arch
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 30, 2017, The Westin Times Square
All Upcoming Live Events
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
No Imagination: UK Chip Biz Goes Up for Sale
Iain Morris, News Editor, 6/22/2017
Does AT&T Deserve Time Warner?
Mari Silbey, Senior Editor, Cable/Video, 6/23/2017
Netflix's Lesson in Culture Expectation Settings
Sarah Thomas, Director, Women in Comms, 6/21/2017
Kalanick Steps Down as Uber CEO
Sarah Thomas, Director, Women in Comms, 6/21/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
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 ...
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.