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Ericsson Warms to Hotspots

Swedish vendor LM Ericsson (Nasdaq: ERICY) has dismissed suggestions it could directly target the corporate wireless LAN market, opting instead to continue with its low-key approach to the carrier hotspot market.

In an interview with Unstrung this afternoon, the world's largest supplier of cellular infrastructure kit played down any plans to embark upon enterprise-related acquisitions in an effort to hook into the corporate 802.11 space.

Last month, Finnish rival Nokia Corp. (NYSE: NOK) hinted that it could be prepared to splash out on such purchases later this year (see Nokia's WLAN Wonderings).

"We are addressing the public wireless LAN market and, more specifically, the larger mobile operators," says Filip Lindell, senior manager of wireless strategies at Ericsson. "We are not active in the home wireless LAN market, and in the enterprise market we have gradually pulled back, because you need to have the proper sales channels. We want to do it though the operators."

Such an approach may surprise industry insiders, in light of the vendor's limited success in the public 802.11 space to date. Despite being one of the early movers in the wireless LAN market, Ericsson has experienced mixed interest from carriers for its Mobile Operator WLAN hotspot product. TDC Tele Danmark A/S and Japan's Yuzon remain the only two publicly announced customers.

A wireless LAN partnership in 2002 with Agere Systems Inc. (NYSE: AGR.A) and Proxim Corp. (Nasdaq: PROX) -- designed to help boost its carrier hotspot offering -- failed to live up to expectations (see Trio Takes WLAN to Carriers and Ericsson Teams on WLAN). "It is alive but it has changed a bit," admits Lindell. "It doesn’t really make sense to label access points as Ericsson if they are made by Proxim. The operators may as well buy them themselves."

Other projects include an involvement in Inspired Broadcast Networks' Cloud rollout, supplying network edge equipment that links "entertainment terminals" to DSL lines from BT Group plc (NYSE: BTY; London: BTA). The Swedish vendor won a deal to supply 3,000 units that combine an 802.11b (11-Mbit/s over 2.4GHz) access point and a DSL modem (see Cloud Looms Over UK Hotspots and Ericsson Bags UK WLAN Deal). The same type of unit was earlier supplied to Telecom Italia SpA (NYSE: TI).

Ericsson itself is content to continue battling it out in the carrier hotspot space, claiming that its wireless LAN efforts are intended to complement its cellular offerings. "Wireless LAN is a small thing for us, compared to the cellular area," says Lindell. "We see wireless LAN as a good complement to GPRS and UMTS, and it makes sense for us to offer it. We treat it like a small brother."

Analysts meanwhile are unsurprised by its decision not to focus on the enterprise market. "They are increasingly losing their focus on enterprise in general," says Ian Keene, VP of telecommunications research at Gartner Inc.. "They used to offer enterprise networking, but that focus has got smaller and smaller. Cellular is their main market, and it will likely stay that way."

Keene notes, however, that the window of opportunity in the hotspot space may be closing. "In the past six to eight months most hotspot operators have been holding back and asking whether they want to roll out a hotspot themselves or piggyback off another carrier, in the way Vodafone has done. T-Mobile is the only real carrier to have rolled out hotspots by itself. We would expect most operators to follow the example of Vodafone rather than the example of T-Mobile" (see Voodoo's Hotspot DoubleUp and T-Mobile: WLAN Loner).

— Justin Springham, Senior Editor, Europe, Unstrung

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