Tuesday, November 8, 2011

Ericsson's Capital Markets Day: Holding Steady

Ericsson is forecasting that the market for service provider network equipment will grow at a 3% to 5% CAGR from 2010-2013 from a base of USD 94 billion in 2010. The market for mobile network equipment is expected to be a little faster at 6% to 8% CAGR over this same period.


While the demand for mobile broadband is surging worldwide and the industry in in the early stages of upgrading infrastructure for 4G, Ericsson cautioned that service provider spending in the near term may be affected by macroeconomic conditions. The company is maintaining its previous financial guidance.


At its Capital Markets Day conference in Stockholm, Ericsson executives offered in depth presentations ranging from the company's financial performance to key market trends and product strategy. A webcast of the event is archived online.


Some highlights:


  • For Service Provider network equipment, Ericsson estimates its share of the market for mobile infrastructure equipment at between 32% to 36%.


  • The market for 3GPP radio access network (RAN) equipment shows the strongest prospects for growth, with an 11% CAGR from 2010-2015, although the market for CDMA RAN+core will be in the decline.


  • North America has the fastest take-up rate for mobile broadband so far, driven by the highest smartphone penentration. The prevalent model that is working calls for subsidized smartphone handsets, tiered pricing, usage caps, and WiFi offload.


  • Europe is experiencing a large variation in mobile broadband uptake. LTE networks have been launched in the Nordics and Germany, and smartphone shipments are now over 50% with some operators. Western Europe has been slow with 4G rollouts. Here there is a focus on network sharing, outsourcing and new services. In Southern Europe, LTE auctions are recently concluded but the picture is affected by political unrest and weak economies.


  • For India, it is early days for mobile broadband and the 3G rollout is at a temporary peak. In China, there are now 952 million mobile subs, with 100 million on 3G. Three live LTE networks are in operation in Japan and Korea.


  • Ericsson has signed 47 managed services deals so far this year.


  • Ericsson is looking to expand licensing of its extensive intellectual property portfolio. The company holds 27,000 granted patents covering a wide range of technologies and the whole ICT value chain. The company claims to be the No. 1 holder of essential patents for 3G (WCDMA/HSPA) and the No. 1 holder of essential patents for LTE with about 25% of issued patents in this area. Ericsson already has a licensed program extending from devices through network access, transport and core platforms. The challenge is to enforce wireless royalties while licensing these patents to enable the vision of 50 billion connected devices. In short, Ericsson contends that any device with cellular connectivity needs a license to Ericsson's patents.


  • Ericsson highlighted its new SSR platform as a key enabler of 4th generation IP services. Ericsson calculates that 1 Hour of smartphone Angry Birds = 2422 Signaling Messages for the network. To handle signaling overload, Ericsson's new SSR routers can handle >150,000 Transaction Messages per second. The SSR uses deep packet inspection (DPI) to support new business models, such as charging per service: Internet browsing package, Social Networking package, etc.


  • By the end of the year, the RBS 6000 base stations will account for more than 95% of Ericsson's total RBS supply. The RBS 6000 has contributed to an increased market share in mobile infrastructure from 32% in May 2011 to today's estimated 36%.


  • In Managed Services, more than 20,000 operator staff have been transfered to Ericsson over the past few years, including 6,000 people from Sprint. The attrition rate for these employees after one year for most transfers is close to zero percent.
http://www.ericsson.com

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