My Ericsson Epiphany

The Swedish vendor has undergone a significant transformation during the past few years, adjusting to the demands of next-generation communications companies.

Steve Saunders, Founder, Light Reading

April 2, 2015

8 Min Read
My Ericsson Epiphany

Greetings, Light Readers, and Happy Easter.

Jesus may have spent 40 days in the desert, but that's nothing (nothing!) compared to how long it's been since I last visited Ericsson's HQ in Sweden. It's been 12 long years, to be precise, since I met with Ericsson in the giant vendor's home town.

So last Thursday I hopped on a redeye to Stockholm and found myself, after a "good" two hours' sleep (meh) at its shiny new HQ located in the Stockholm suburb of Kista (named after the Beach Boys song, obviously).

And my, what a difference 4,380 days makes. Last time I was at Ericsson I met with an anonymous marketing spod in what looked suspiciously like a small, single-storey elementary school. How well I remember the meeting; We talked about their stuff, which used stuff to do some stuff with other stuff. No-one fed me. [Editor's comment: Note to PR people… big mistake]. Then I went home.

It was "so so."

Last week's trip, in contrast, was little short of a biblical revelation for me.

The reset started at the front door. Ericsson moved into a new "statement" headquarters a couple of years ago, built around a stunning atrium.

Figure 1: Ericsson's spiffing HQ building in Kista. Ericsson's spiffing HQ building in Kista.

I'm a big fan of good architecture and Ericsson's new HQ does exactly what a good HQ should do: send a signal that the company is doing really well. The whole building smells like success. And profits (36.6%, as of its most recent earnings call). And meatballs. (Not really… though that would have been pretty funny, right?).

This ambience was reinforced by the procession of Ericsson staff that I met with that day; a jolly crew who universally appear to both have the bit between their teeth, but also are clearly enjoying their jobs at a company in the ascendant.

That's especially true of charismatic CTO, and Ericsson lifer, Ulf Ewaldsson, who is widely recognized as the visionary segueing the company from its traditional roots as a mobile market leader in the 20th century to a holistic communications solutions provider positioned for success throughout the 21st century.

Figure 2: Ericsson CTO Ulf Ewaldsson gives Light Reading's Steve Saunders the guided tour of next-generation communications technology. Ericsson CTO Ulf Ewaldsson gives Light Reading's Steve Saunders the guided tour of next-generation communications technology.

There was plenty to be impressed by in the packed agenda that Ericsson had laid on for me, but five things really stood out.

1. Company structure
The most impressive attribute of Ericsson today doesn't have anything to do with technology -- it has to do with the way it has restructured its business during the past ten years, becoming a more international company and diversifying out of the mobile networks infrastructure market. The last time I visited Ericsson, about half of its employees were based in Sweden. Today that's down to 17,000, or 15% of the company's global workforce.

Even more significantly, more than half of Ericsson's staff now deliver professional services, rather than developing, selling and supporting hardware.

Figure 3: Ericsson's structural changes are reflected in the mix of its revenue streams, towards services and software, away from hardware. Ericsson's structural changes are reflected in the mix of its revenue streams, towards services and software, away from hardware.

That's hugely important, because current trends towards virtualization and white box networking mean that service providers are going to need an ever-increasing amount of help with their networks. Traditionally, they got that help from their equipment manufacturing partners, the ones selling them proprietary, end-to-end networks. But in the new, increasingly open standards world of telecom, that help is much more likely to come from systems integrators. Ericsson's incumbent hardware competitors are at various stages of realizing that they need to reinvent themselves as system integrators in order to survive and thrive in the new open communications order, but, with more than half of the company's employees -- that's 65,000 staff around the world -- fulfilling this function today, Ericsson is already there. (For more on this trend, see Think Outside the White Box.)

2. Breadth of portfolio
Stepping all the way back from the complexity of today's communications market, it's apparent that next-gen networks will be divided into two broad types: really fast automated (virtualized) networks, and really slow autonomous (IoT) networks. During the course of my briefings with Ericsson it was apparent that it has a clear vision, internally, for how to deploy both. (Ericsson's strategy for analytics and M2M is especially impressive.) Most of the Ericsson team's pitches were, mercifully, acronym free, focusing more on the effect of the technology than the plumbing… or as Anders Olin, Head of Product Area Network Function at Ericsson's Business Unit Cloud and IP, told me, the goals are "standardizing, simplifying, centralizing, virtualizing, and automating."

3. Massive R&D investment
Part of Ericsson's strategy to expand beyond its history as a leading purveyor of mobile technology is to spend big on R&D. And when I say "big," I mean an astonishing US$5 billion a year (or 15% of revenue). To put that in perspective, that's more than the entire annual revenues of one of its main competitors -- an almost surreal amount.

A lot of that money is being spent in the mysterious "Building 5" on Ericsson's campus in Kista -- a bit like a Swedish Area 51. I wasn't allowed to visit Building 5, sadly, and attempts to get Ulf to tell me what Ericsson is working on by guessing were disappointing…

Steve: "Is it time travel?"

Ulf: "No."

Steve: "Is it a teleportation device?"

Ulf: "No."

Steve: "Am I getting warmer?"

Ulf: "A bit. Not really."

And so on.

4. 5G in the house
One of the things Ericsson is working on in its R&D department is 5G technology, and the most visually engaging highlight of my visit to Kista was a demonstration of a working 5G handset. OK, so the "handset" weighs about 700lb and was wheeled in (ee! ee! ee!) on an industrial-strength motorized trolley, but considering that 5G delivers throughput 1,000 times faster than 4G, and isn't expected to be available commercially until 2020, this is still an impressive feat. And, and, as the Ericsson scientist demonstrating it pointed out, "the 4G prototype was a lot bigger." (See photos below and In Ericsson's 5G Lab .)

Figure 4: Inside the R&D labs at Ericsson, with the not-yet-very-mobile 5G device prototype. Inside the R&D labs at Ericsson, with the not-yet-very-mobile 5G device prototype.

Figure 5: A closer look at the 5G prototype device -- yes, it really is that big (currently). A closer look at the 5G prototype device -- yes, it really is that big (currently).

5. The HDS 8000
It's unusual these days to hear about a significant hardware announcement (most of the cool stuff is taking place at the other end of the ISO stack) but Ericsson definitely got my attention with its Hyperscale Datacenter System (HDS) 8000 telco data center product, which features Intel's Rack Scale Architecture. (See Ericsson, Intel Target Telco Data Centers.)

The product may look like just another hulking great, modular server, but it's actually much more noteworthy than that, enabling service providers that are deploying cloud networks to build "disaggregated" server farms using virtualized server hardware and software.

In English? The servers can be configured to act as a single giant virtual server even when spread out over a virtual telco data center comprising racks that are kilometers apart. The connections between the machines are provided using an "optical backplane," which sounds pretty blah until you open up the back of the machine and see that the backplane is made of meshed fiber cables, not some short-range and super-expensive proprietary backplane tech.

This is actually revolutionary stuff, and its genesis lies with web companies such as Google and Amazon, which don't really give a stuff about things like NEBS compliance or how old skool telecom rappers think data centers are "supposed" to be built and so instead have been making up a bunch of new ways to do their thing in the data center. What Ericsson has done (along with partner, Intel) is take that kind of innovative thinking and put it in a format that service providers can roll out en masse.

It's an approach that owes much to the white box philosophy that I've been getting excited about recently. And, like white box solutions generally, the potential for the HDS 8000 is ginormous. In massively distributed mobile edge networks, for example, where carriers are wrestling with thousands of data centers and tens of thousands of central offices, the savings delivered by the platform are astronomical -- 40% to 80% cheaper on day 1 versus a traditional server-plus-fiber-channel deployment, Ericsson claims. (For more on the economics of the HDS 8000, register for Light Reading's webinar focusing on this product, which will take place in the coming weeks -- keep an eye on Light Reading for registration details.)

Ericsson has been around for 139 years. Based on my visit to Kista, I see no reason it shouldn't be around for 139 more. Because this is not the old Ericsson -- this is 'Newicsson' [Editor's note: Really?], and well worth a closer look.

To hear more about Ericsson's strategy, look out for my upcoming video interview with CTO Ulf Ewaldsson on Light Reading. And to learn more about its HDS 8000 joint development with Intel, look out for the upcoming webinar.

— Stephen Saunders, Founder and CEO, Light Reading

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About the Author(s)

Steve Saunders

Founder, Light Reading

Steve Saunders is the Founder of Light Reading.

He was previously the Managing Director of UBM DeusM, an integrated marketing services division of UBM, which has successfully launched 45 online communities in less than three years.

DeusM communities are based on Saunders' vision for a structured system of community publishing, one which creates unprecedented engagement among highly qualified business users. Based on the success of the first dozen UBM DeusM communities, the UBM Tech division in 2013 made the decision to move its online business to the UBM DeusM community platform – including 20 year old flagship brands such as Information Week and EE Times.

Saunders' next mission for UBM is the development of UBM's Integrated Community Business Model (ICBM), a publishing system designed to take advantage of, and build upon, UBM's competitive strengths as a leading provider of live events around the globe. The model is designed to extend the ability of UBM's events to generate revenue 365 days of the year by contextually integrating content from community and event sites, and directories, to drive bigger audiences to all three platforms, and thereby create additional value for customers. In turn, these amplified audiences will allow business leaders to grow both revenues and profits through higher directory fees and online sponsorship. The ICBM concept is currently being discussed with a broad group of business leaders across UBM, and is earmarked to be piloted in the second half of 2013 and early 2014.

UBM DeusM is Saunders' fifth successful start-up. In 2008, he founded Internet Evolution (, a ground-breaking, award-winning, global online community dedicated to investigating the future of the Internet, now in its fifth year.

Prior to Internet Evolution, Saunders was the founder and CEO of Light Reading (, Heavy Reading (

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