VIDEO INTERVIEW: Future acquisitions, a 5G vision and network vendor consolidation were issues tackled by Hans Vestberg in a recent interview with Mobile World Live, but it was the theme of transformation – both for the Swedish firm and the wider industry – that was most on the mind of Ericsson’s CEO.
“We’re already in the biggest technology revolution I’ve ever seen,” he said. “In only five years, we’re up to 3 billion mobile broadband subscriptions worldwide. In the next five, 65 per cent of the world’s population will have 4G coverage, and 85 per cent will have 3G coverage. Almost everyone will be connected by 2020. There’s enormous transformation, potential and possibilities – not only for people but for businesses and society.”
Ericsson, added the CEO, has already undergone “huge transformation”. Ten years ago, around two-thirds of the company’s revenue came from hardware. Now, the overwhelming bulk of sales comes from software and services.
“Networks have to change in order to handle data,” said Vestberg. “Old networks were designed for voice, but we now have things like IoT and new gadgets. It needs a totally new IT infrastructure.”
Under the stewardship of Hans Vestberg, Ericsson has made bold acquisitions to diversify beyond infrastructure; Telcordia (OSS/BSS) and Microsoft Mediaroom (TV and media) are just two examples. By expanding into new areas, Vestberg aims to offer IT services “end-to-end”, not just for the telecoms industry but in other sectors as well. In 2013, Ericsson acquired Red Bee Media, the former BBC Broadcast division. “We’re trying to be number one in all the areas we’re into,” said the CEO, adding that the firm will continue its acquisition spree in the services space to reach this goal.
Not that networks are unimportant. And with so-called ‘5G’, Vestberg anticipates they will become even more intelligent.
“The first step with 5G is evolution of 4G, so we can reuse as much [technology] as possible for much higher speeds and better latency. The second step is we want much more service aware networks, or ‘sliced’ networks, which can handle different type of use cases – everything from remote health care, automated cars, or reaching a remote place where batteries can only be replaced every five years. The network has to be smarter to give the right type of characteristics and throughput for a specific use case. For me, that is what 5G is. It will have an enormous impact for businesses and our society.”
Vestberg seemed to suggest, however, that there was little room for consolidation among the big network vendors. “Ten years ago there were 15 vendors who could deliver a 2G network,” he said. “If you look at multi-standard radio handling 2G, 3G and 4G on the same hardware rack, we’re probably down to three. I can’t say how [consolidation] will pan out. It’s hard to predict. What I do know is we are going to invest a lot and keep our number one position in mobile networks. That’s the most important thing for us.”
That investment in networks won’t involve an acquisition strategy though: “In our core businesses such as mobile networks we are doing that [investment] organically with our own money,” noted Vestberg.