Ericsson may not be too big to fail

Steven Hartley/Ovum
OvumWe recently met with Ericsson CEO Hans Vestberg to hear his vision for the company’s future. His message for the company is clear: breadth and depth of expertise will see it maintain its leadership. Yet this breadth of scope is our key concern for its long-term future. Maintaining a leadership position in mobile, while developing new services and growing its position in the integrated network space, is a big task. Ericsson is certainly well positioned to achieve its goals, but it faces some major challenges – not least the potential alienation of its current customer base.
 
Mobile infrastructure: empires can fall as well as rise
Hans Vestberg made much of Ericsson’s number one position in mobile infrastructure and reiterated Ericsson’s recent announcement that it is twice the size of its nearest rival. It is doing particularly well in LTE infrastructure and managed services. However, Huawei is also growing rapidly and at its recent analyst event in London made it clear that it was determined to continue its rapid growth. Additionally, the mobile infrastructure market is becoming increasingly standardized and differentiation more difficult.
 
Ericsson must therefore guard against arrogance and complacency. Undoubtedly, it has much to be confident about. However, no lead is unassailable. Ericsson used to be the world’s largest handset manufacturer, yet it recently exited the sector completely. Nokia is another Nordic vendor that will vouch for the need to adapt to new conditions or risk an ‘unassailable lead’ becoming exactly the opposite. Arrogance and complacency can not be allowed to set in. Internal culture will need to be managed, as well as the core strengths that Vestberg emphasized: global presence and scale; technology leadership; and service leadership.
 
Integrated networks are a work in progress
 
The same slide on which Vestberg proclaimed Ericsson’s leadership in mobile also emphasized that it still has a long way to go in the converged fixed and mobile space. By Ericsson’s own estimates it is only number four or five in the converged network space. Our Future of Broadband reports concluded that most people in developed markets will have both a fixed and mobile broadband connection and it is therefore prudent for networks to become more integrated.
 
Therefore, it is clear that much work awaits if Ericsson is to improve its current standing in the fixed arena. Without this element its desire to be an end-to-end solution provider is under question moving forward despite its undoubted advantage in using its strength in wireless infrastructure as a “Trojan horse” to enter operators’ fixed networks.
 

Pages

Tags: 

Commentary

5G and data center-friendly network architectures

Matt Walker / MTN Consulting

Webscale and transmission network operators' interests are aligning as the 5G era dawns

Matt Walker / MTN Consulting

Webscale and transmission network operators' interests are aligning as the 5G era dawns

Rémy Pascal / Analysys Mason

The launch of 5G by South Korean operators serves as a first benchmark for other operators around the world