Tuesday, May 4, 2010

Ericsson Outlines Strategy for a Changing Market

Ericsson predicts that the number of mobile broadband users will increase from today's 400 million to 3.5 billion in 2015, while the total number of Internet-connected devices will soar to 50 billion by 2020. By this point, the number of network equipment vendors is forecast to very much reduced -- those that remain will generate more revenue from services and software and less from hardware.


In its Capital Markets Day presentation to investors and journalists in Stockholm, company executives outlined their strategy to transform the company to address these opportunities.


"We see good long-term growth opportunities in our traditional segments and we are determined to further strengthen our position and continue to grow faster than the market. Less than 5% of the world's population has access to 21 Mbit/s or more in the air, at least 1.5 million installed GSM radio base stations must be replaced and in addition we see continued need for services in fields such as consulting, system integration and managed services. We estimate that our addressable market, including joint ventures, is worth USD 350 billion," stated Hans Vestberg, who took over as the company's CEO at the beginning of this year.


Some highlights from the presentations:

  • Vestberg said the company is focused on maintaining and improving its strong margins, and then on organic growth. There are no merger/acquisition plans on the radar. The company will continue to reduce its cost base.


  • ST-Ericsson said its restructuring plans are on course. Its mission is to enable the larger corporate vision of 50 billion interconnected devices by supplying complete silicon/software for consumer devices. ST-Ericsson's
    new multi-mode modem architecture will provide software-defined radio access for LTE at up to 100Mbps and HSPA+ at 42 Mbps.


  • Sony Ericsson returned to profitability in Q1 2010, while shipping only 10.5 million units -- down from 14.5 million a year earlier. Gross margins rose to 31% from 8% a year earlier. The restructuring is now 80% complete and the company's workforce has been reduced by 3,150 employees.


  • In mobile networks, data and speed have already surpassed voice as an investment driver.


  • Ericsson's data based on global network measurements indicates that mobile data traffic will continue to grow at 100% annual rates through 2015.


  • Mobile voice and SMS traffic continues to grow as well, although revenue for these services will be flat.


  • Mainland China added more than 100 million subscriptions last year. Ericsson expects similar numbers in 2010.


  • Non-voice revenues now make up 30% of Chinese operators' total revenues.
http://www.ericsson.com

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