Free Newsletter

QUICK POLL
  • Which training workshop is of most value to your organisation?
  • Preparing your business for the Internet of Things
  • The Internet of Things and Cloud computing
  • Radio technologies for connecting the Internet of Things
  • Smart Cities and intelligent infrastructure
  • WebRTC and the end of the telco
EVENTS
Meet the leaders of the mobile app economy ? Open Mobile Summit, London, June 8-9
Navigation Strategies Europe 2011
ITU Telecom World, 24-27 October 2011 at Palexpo, Geneva, Switzerland
Ubiquitous Location and Positioning Technology, 6th-7th December 2011, Chicago
Advertize your telecoms job

Ericsson sets up dedicated network software unit

Splits Networks division in two, one for Cloud & IP, as hardware falls below one-third of revenues

By CAROLINE GABRIEL

Published: 25 April, 2014

READ MORE:

Ericsson has been battling to strike the perfect balance between profit and revenue growth in its recent quarters, but it is going through a deeper change too, with a shift towards software that is likely to transform the make-up of its revenues, and its key quarterly concerns, over the coming years.

As the software content of mobile networks rises, and carriers toy with full SDN (software defined networking), Ericsson has reorganized its infrastructure division to create a dedicated unit for virtualization. This reflects a change in focus that has been building for some time - at the annual general meeting recently, CEO Hans Vestberg said hardware accounted for only one-third of Ericsson's revenues in 2013, down from 73% in 1999, while software contributed 23% and services 43%, up from a combined 27% at the earlier date.

One aspect of this change has been the development of networks which rely on software to support flexible design, agile reconfiguration and swift upgrades with limited hardware swapping required. The next step is the move to virtualize network functions entirely in software on standard servers, reducing the need for specialized hardware. This represents a threat to the remains of Ericsson's once-fat equipment margins, but the Swedish giant, sensing the inevitable, has been a driver of the NFV (Network Functions Virtualization) specifications, and has recently embraced the OpenStack and OpenDaylight SDN platforms warmly.

Now its new interests are made explicit in its organizational structure, with the splitting of the Networks division into two parts - Radio, and Cloud & IP. Cloud & IP will drive work on virtualization, SDN and other cloud-based network platforms, while Radio will take care of the traditional products. Both units will still report to Networks chief Johan Wibergh but will get their own separate heads too.

Vestberg said in a statement: "The business logic and Ericsson's relative position is different in the two areas. Radio is the foundation of Ericsson's technology leadership and we are the undisputed market leader, same size as number two and three together. We are committed to maintain our leadership as the market evolves with 5G. In the cloud and IP space, which are vital for the evolution to 5G, we have made significant progress but are still a challenger. In a transforming market we will now intensify our work to capture opportunities in virtualization and cloud, building on our leading position in core networks."

The restructuring will be completed by July, and so its impact on financial performance and reporting will not be felt for a while. But an ever-deeper focus on software should help the company in its quest to keep profit margins high, even if the hefty revenues of proprietary hardware are behind it.

Related Stories

COMMENTS

Add Comment
No comments yet. Be the first to add a comment!
MARKET PLACE

    European Carrier Mobile Broadband Network Performance

    Analysing and comparing the data speed, latency, network quality and smartphone penetration for 94 mobile carriers in 28 European countries....

    Next Generation Haptics: Market Analysis and Forecasts

    An in-depth study of the growing popularity of haptics-enabled tactile feedback on mobile devices to augment UI interactions and enrich...
WHITE PAPERS

    Satellite Phones: Will Dual Mode Help the Phoenix Rise from the Ashes?

    Satellite phones have followed an arduous path since their much-hyped launch more than a decade ago. The hype was followed by an e...

    Mobile Widget Platform Market Analysis: Understanding the Business Case and ROI

    This white paper presents an analysis of the mobile widget platform market, as well as metrics supporting a mobile carrier?s busin...

POST COMMENT

You must be a registered user to post a comment. or
Username *
Email *
Comment *