Ericsson Gets a Wake-Up Call

Ray Le Maistre
11/9/2016
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There's a good chance that Börje Ekholm, the incoming Ericsson CEO, will have been offered scores of opinions about what he should do when he takes the hot seat in January next year -- in addition to further cutting costs, that is. (See Cost Cutting Must Continue, Says Ericsson's New CEO.)

But if he's to take on board any views, those of Ericsson's customers should be at the top of the list, right?

Well in this case, those views have been made very public. Richard Damm, the Head of Innovation at Telia Company , has written an open letter about the state of the vendor company, and it doesn't make for pretty reading.

Damm essentially says Ericsson should get back to what it's really good at (mobile infrastructure development), pull back on its professional services focus, innovate in the cloud technology market (and not focus on cost-cutting efforts) and make sure it wins in the 5G market: "Win 5G. It's that simple. Just bloody win," he writes.

Telia is Sweden's national carrier and (as you'd expect) a long-time customer of the Swedish vendor. (See Telia Zone Set For 2016 Launch.)

Damm is also a former Ericsson executive who held a number of roles during a ten-year stint that began in January 2005, so he has a view of the vendor from the inside and out. His roles at Ericsson included:

  • Head, Business Development, Cloud (products, services and partnerships)
  • Head, Product, Cloud Accelerator
  • Head, Product Management, Service Delivery & Strategies, Mobile Advertising
  • Head, Product Lines Digital Media & Connected Home
  • Regional Sales Director (Central Europe, Middle East and Africa) for the Managed Service and SaaS (Cloud) application offering
  • Global Account Manager (responsible for all sales efforts at a Tier 1 global mobile operator)

So this guy has form.

And he doesn't pull his punches about the sector in general. "Ericsson and the Telecom sector as a whole has a meta level problem of being a shit industry right now," he notes.

Ericsson has had a troubled year -- losing a CEO, watching its share price slide, announcing job cuts and posting its first net loss in years. (See Eurobites: Ericsson Confirms Swedish Job Cuts, Ericsson Swings to First Net Loss in 4 Years and Ericsson Ejects CEO Vestberg.)

In such a situation, the reaction of many a company would be to reach out to an important customer privately, not engage in public and hope any fuss does away. Or, alternatively, just ignore it and hope no one notices (a common approach to problems or challenges, but we all know that's the worst course of action, don't we... don't we?).

So it's credit at least to Ericsson's Chief Marketing and Communications Officer, Helena Norrman, that she has responded on a public platform in a message board response to Damm's letter, and stated that the letter would be shared with the vendor's leadership team.

It seems clear that Damm has honest intentions here and that he isn't on some sort of vendetta -- he wants Ericsson to succeed. Is he right? Will anyone take any notice?

For me, the big question raised by Damm is whether the services business is one with which Ericsson should persevere. Is that holding the company back? Do you agree with Damm?

Maybe Ekholm will agree and make services the focus of his cost-cutting agenda. We'll probably find out by the time the industry hits Barcelona for MWC 2017.

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

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kq4ym
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kq4ym,
User Rank: Light Sabre
11/16/2016 | 11:04:01 AM
Re: It's the cloud
It may be that "cutting costs" is always the knee jerk reaction to losing market or money. But, the hope of some that getting a lead in 5G might not be a guaranteed way to profitability and respectibility either. It's going to be a journey of some significance either way the company chooses to head.
Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
11/11/2016 | 7:29:39 AM
Re: Ericsson's problems run deeper
You mis-interpreted my comment. I couldn't figure out Red Bee Media at the time, and still can't really understand it. I know a few people socially who work there (or have worked there). It is quite far from Ericsson's core business and is/was head-count heavy. So my point was they do take risks, not that it was a good idea.

The company argued in the investor update yesterday that the media market is fragmented. Fair enough, but I still don't really get it. Anyway, they're sticking with it. 

The update also made very clear that Ericsson is not backing out of professional services, as the orginal linked-in article suggested. The logic here is obvious, as are the risks.

As for the assertion that Ericsson is not innovative, what have you been doing with your literally hundreds of hours of primary research? 
Director46894
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Director46894,
User Rank: Light Beer
11/10/2016 | 3:03:07 PM
Re: Ericsson's problems run deeper
Sorry Gabriel but I continue to disagree based on the fact that our company has literally done hundreds of hours of primary research on Ericsson.

Anyone can do an acquisition but is it the right one?

Red Bee sounds great - awesome idea for content - however when your foundation is crumbling under you, it's probably not what you want to focus on.

5G - minimum 2 years until it will generate revenue - so again with a crumbling foundation 2 years is an awfully long time.

Cost cutting/downsizing/reorganizing/re-focussing hurts - you end up taking your eye off the ball.

Not a good combination.

 

 

 
mendyk
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mendyk,
User Rank: Light Sabre
11/10/2016 | 10:07:07 AM
Re: This guy has form
And he has logged his most recent experience as "head" in the "cloud." That's a much better place for the head to be than some other alternatives that spring to mind.
Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
11/10/2016 | 3:58:55 AM
Re: Ericsson's problems run deeper
Sorry alangonchar, but this is not correct: "The hierarchy they have does not lend itself to innovation and risk taking"

Buying Red Bee Media was definitely risk taking behaviour.

Leading LTE and 5G development is innovative.
Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
11/10/2016 | 3:34:03 AM
This guy has form
 

So this guy has form.

Yes -- he does. Look at the top four of his job titles at Ericsson from the article. Pretty hard to figure out what they actually are. 
  • Head, Business Development, Cloud (products, services and partnerships)
  • Head, Product, Cloud Accelerator
  • Head, Product Management, Service Delivery & Strategies, Mobile Advertising
  • Head, Product Lines Digital Media & Connected Home
  • Regional Sales Director (Central Europe, Middle East and Africa) for the Managed Service and SaaS (Cloud) application offering
  • Global Account Manager (responsible for all sales efforts at a Tier 1 global mobile operator)

True, six jobs in 10 years means he's been around the company. On the other hand, he hasn't spent very long in one role.

Now he's head of innovation at Telia. What does that actually involve? Beats me. 

At least we get this nugget of advice "Win 5G. Its that simple. Just bloody win."

I'm being unkind obviously (and feel very uncomfortable about it). And I'm aware that this means I'm due an ad hominen attack at some point.

But really I'm making the point that everyone has advice for Ericsson right now. His article has 144 comments and counting. The leadership should be careful and deliberate about what they conclude from it.

What I like about his column on linkedin is that he cares about the company, his old collegues, his new employer's major supplier, and a national industrial champion. Respect for that. He clearly means well.
R Clark
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R Clark,
User Rank: Blogger
11/9/2016 | 8:19:47 PM
Re: It's the cloud
Also, "A shit industry right now" would be an excellent conference session.
R Clark
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R Clark,
User Rank: Blogger
11/9/2016 | 8:18:49 PM
It's the cloud
He's right that cloud is more important than services. The best thing vendors can do for service providers is reshape their networks so they're low-cost and agile, and cloud/SDN/NFV are the way to go. IF there's a services business, it will be based around that architecture. 

Ericsson does sound as though it doesn't get the urgency of this. 
alangonchar
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alangonchar,
User Rank: Moderator
11/9/2016 | 3:35:05 PM
Ericsson's problems run deeper
Ray - Good perspective but having worked or tried to work with Ericsson on the Competitive Intelligence front - I see a problem that runs much deeper than technology.

Ericsson seems to have built an organization that reminds me very much of a large government institution.

The hierarchy they have does not lend itself to innovation and risk taking - they excel at passing the buck. I realize that they are huge but other large companies have found ways to flatten the organization, make individuals/teams/dpeartments own an issue or project etc...

The icing on the cake is an arrogance that is astounding and I'm not sure where and when that started.