Ericsson wants to focus on its core business of selling networks to operators in order to cut costs, Reuters reported, shifting from a plan to generate 25 per cent of revenue from outside telecoms by 2020.
“We will focus on telco clients and networks exclusively for now,” Ericsson’s new head of digital services, Ulf Ewaldsson, told Reuters in a recent interview.
Ericsson wanted to boost its media, utilities and transport businesses, which contributed around 10 per cent of its revenue in 2013.
However, things have changed, especially since new CEO Borje Ekholm took over five months ago. Just last week the Swedish firm appointed banks to explore the sale of its two broadcast and media units, which were once held up as key components for its future growth.
Ericsson now sees potential in clients which will be looking to upgrade their networks for 5G and the Internet of Things.
Ewaldsson said the firm will sell communication networks and IT services such as cloud storage through telecoms companies and that it wants to be a market leader again in radio base stations.
Ericsson is also hoping investments in automation and artificial intelligence will make its networks more efficient, he added.
Clients for Ericsson’s core business include Vodafone and Verizon Communications, but profits have taken a hit because of competition from Huawei and Nokia.
According to Reuters, while investors welcomed the change in strategy, there are concerns too much reliance on operators could be risky because they themselves are struggling to up their revenue and may not be willing to spend on networks.
It quoted analyst Richard Kramer from Arete Research as saying “Ericsson simply lacks the products to sell to the likes of Google, Facebook, or Amazon, which are the biggest incremental spenders on infrastructure.”