Ericsson says that the overall network equipment market will grow by between 3- 5 percent (CAGR) over the next three years – significantly slower than the double digit growth expected in the services side of its business.
"This development will naturally imply a future business mix for Ericsson with more recurring software and services revenues,” said CEO Hans Vestberg – but he added that hardware would always remain “part of the mix and a key differentiator” for the Swedish vendor.
Ericsson has been impacted by a higher share of coverage and modernisation projects – rather than capacity expansions – in Europe, a situation it says is “expected to prevail short-term”, but will start to “gradually decline” at the end of this year.
The market outlook (2012-2015) in Ericsson's key equipment market segments – radio, IP/transport and core – is expected to be 4-6 percent (CAGR). In radio a CAGR of 2-4 percent is expected; in IP and transport a CAGR of 6-8 percent; and in core a CAGR of 0-2 percent.
Meanwhile, the market for support solutions is forecast to show a CAGR of 9-11 percent, including a CAGR of 12-14 percent for the media market. The market for OSS/BSS software and services is expected to show a CAGR of 5-7 percent.
Ericsson sees mobile broadband, managed services and OSS/BSS as “areas with portfolio momentum.”
The vendor recently reported Q3 net income of SEK2.2 billion (US$326.8 million), down 42 percent from SEK3.8 billion year-on-year, on revenue of SEK54.6 billion, down 2 percent from SEK55.5 billion.