& cplSiteName &

Ericsson CEO's New Business Logic

Ray Le Maistre
4/24/2014
50%
50%

The networking worlds of radio access and cloud need require a "different business logic," Ericsson CEO Hans Vestberg told Light Reading Thursday after the Swedish vendor announced it will carve out two new units, "Radio" and "Cloud & IP," from its current networks division. (See Ericsson Creates Cloud & IP Unit.)

Though Ericsson AB (Nasdaq: ERIC) is the market leader in radio access networks (RAN), "we are a challenger in routers," Vestberg said.

Positioning the company as a "challenger" puts a positive spin on its router market position. Alcatel-Lucent (NYSE: ALU) built a significant router business following its TiMetra acquisition in 2003, challenging Juniper Networks Inc. (NYSE: JNPR) and Huawei Technologies Co. Ltd. for the No. 2 spot behind Cisco Systems Inc. (Nasdaq: CSCO). But Ericsson is still a minnow in the market with a low single-digit marketshare, seven years after spending $2.1 billion on Redback Networks. (See TiMetra at Heart of AlcaLu's Shift.)

But the Ericsson CEO is determined to change that. Without providing any financial specifics, Vestberg said his company is significantly increasing its capital allocation to IP and is aiming to be the No. 3 player in the market. That's a target we've heard before -- back in 2008. (See Redback Targets 30% Market Share.)

"We need to work in a different way while keeping the synergies we have built up in the networks business unit," he said. "We need a different unit to act in a different way. It's business logic that is driving the split" of the networks division.

Quite how this logic will manifest itself is another matter, and it's not likely to be communicated until the cloud and IP unit has a lead executive. Since this is a different type of unit, focused on cloud, data centers, SDN, NFV, and other IT-oriented sectors, will Ericsson seek to hire a business leader from outside the company? Vestberg said only that the process to appoint a leader is under way, and he couldn't say whether it might be an external appointment or not.

Whoever that executive is will be tasked with building on the marquee telco cloud engagement Ericsson has struck with AT&T Inc. (NYSE: T) and to further develop the virtualized network element process that's under way within the vendor. (See AT&T's Cloud Future Takes Shape.)

"We started the virtualization process in 2010, and many of our products are already virtualized -- IMS, packet core, part of the billing systems… we are working towards virtualizing the whole portfolio apart from the radio interface, as there's nothing to gain from virtualizing that," Vestberg stated. "This is happening in telecom… the cloudification of telecom."

So was it this virtualization strategy that attracted AT&T? What exactly is Ericsson's role in the US operator's Domain 2.0 program?

"That is for AT&T to say," Vestberg said diplomatically. "But we have been early to virtualization, and we also have a very large professional services team with a lot of systems integration capabilities. I'd like to think it's a combination of our virtualized assets and those integration capabilities that has attracted AT&T." He then reiterated his opinion that Brazil would win this summer's soccer World Cup and rushed off to his next engagement.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
SachinEE
50%
50%
SachinEE,
User Rank: Light Sabre
4/28/2014 | 10:37:23 AM
Re : Ericsson CEO's New Business Logic
Ericsson needs to adopt new business logics by placing in a new and better networks business unit that will act in a different way. This is the only way to ensure that it beefs up its synergy as a challenger against Juniper and Alcatel-Lucent and their likes in the router business world. The newly elected leader for the new unit, whether external or internal, should come with the full spirit and determination of developing the marquee Telco cloud engagement Ericson has stuck with AT & T Inc, data centers, SDN, NFV, and other IT-oriented sectors. 
nasimson
50%
50%
nasimson,
User Rank: Light Sabre
4/27/2014 | 11:40:48 PM
Re: Devil in the details
@Ray: What exactly has Alcatel Lucent been able to do with Nuage? Pardon my ignorance on Nuage, but is it a very successful business line.
SachinEE
50%
50%
SachinEE,
User Rank: Light Sabre
4/26/2014 | 6:19:58 AM
Re: Devil in the details
@Ray, very well put; the devil is in the details. It is interesting to note that the Ericsson CEO was very careful not to mention any specific figures when it came to the exact amount of money that the company was allocating for investment in the new cloud and IP section of the business. It is hard to speculate or predict whether such a venture will be successful or not. The more the financial investment, the likelier the venture is likely to succeed but for now, since those figures are absent, all we have to do is watch and hope that its not 2008 all over again.
Ray@LR
100%
0%
Ray@LR,
User Rank: Blogger
4/24/2014 | 12:32:52 PM
Devil in the details
THis is all very well, but let's see exactly what the yet-to-be-appointed Cloud & IP lead exec has to say and how this unit is going to behave any differently from a regular telco vendor operation. 

It's not just the operators that need to start thinking differently. 

Dare I say it, but I think Alcatel-Lucent has lead the way here with Nuage.
Educational Resources
sponsor supplied content
Educational Resources Archive
From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
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
Cisco's Innovations in Cable

5|26|16   |   03:18   |   (0) comments


Marc Aldrich from Cisco discusses the latest in security, the evolution and momentum for CCAP and what the industry will be seeing next from Cisco.
LRTV Documentaries
Leading Lights 2016 Highlights

5|25|16   |   02:26   |   (1) comment


Some of the high points from this year's Leading Lights awards dinner at the Hotel Ella in Austin, Texas.
LRTV Documentaries
Light Reading Hall of Fame 2016

5|23|16   |   05:43   |   (0) comments


Find out who has been welcomed into Light Reading's Hall of Fame this year.
LRTV Custom TV
ZTE TM Forum Highlights

5|23|16   |     |   (0) comments


ZTE showcased its new ICT solutions at TM Forum in Nice.
LRTV Interviews
Gamma's MD on the Emergence of UC2

5|20|16   |     |   (0) comments


Gamma Communications Managing Director David Macfarlane believes the unified communications (UC) market has reached a tipping point.
LRTV Custom TV
The Ultimate 5-Minute Guide to Digital Customer Engagement

5|20|16   |     |   (0) comments


In this short video, you will hear all about how Digital Customer Engagement is the key to meeting customer expectations, keeping them happy, and maximizing revenue. VP Product & Marketing at Pontis, Ofer Razon, breaks down for us the five essential capabilities for successful Digital Customer Engagement. Don’t miss!
LRTV Custom TV
NFV in 2016: Part 1 – NFV Use Cases Get Real

5|19|16   |   05:57   |   (0) comments


Consensus is building around the key use cases for NFV, including managed IP services at the network edge and on customer premises, which can generate new revenues from enterprises/SMBs and consumers; Evolved Packet Core to support LTE migration; and adjacent technologies, such as TAS and IMS, to support VoLTE and next-generation charging and policy control ...
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 3

5|19|16   |     |   (0) comments


Steve Vogelsang discusses the challenges of operational transformation and how Nokia helps its customers. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Level 3: Why UC Is In Demand

5|17|16   |   04:12   |   (1) comment


Andrew Edison, Level 3's senior VP of sales, EMEA region, talks about the drivers of growth in the unified communications services market.
LRTV Custom TV
ARM's OPNFV Action

5|17|16   |     |   (0) comments


At the ARM booth at MWC 2016, Joe Kidder and Bob Monkman speak to Light Reading about OPNFV and their upcoming action.
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 2

5|16|16   |     |   (0) comments


Steve Vogelsang gives advice to service providers on how to move to NFV. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Interoute CTO on NFV's Maturity

5|13|16   |   06:46   |   (1) comment


Matt Finnie, CTO at international operator Interoute, explains how NFV has made life easier in terms of logistics and how Interoute can now enable a 'software-defined moment' for its customers.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
December 6-8, 2016,
June 16-18, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
DT: Telcos Must Escape Vendor Prison
Iain Morris, News Editor, 5/24/2016
AT&T to Start 5G 'Friendly' Trial by 2016 End
Dan Jones, Mobile Editor, 5/24/2016
Cisco's Patel Hails 'Microculture' Successes
Iain Morris, News Editor, 5/26/2016
Cable Is Eyeing Its Retail Options
Mari Silbey, Senior Editor, Cable/Video, 5/25/2016
AT&T's Margaret Chiosi Retires
Ray Le Maistre, Editor-in-chief, 5/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.