Wednesday, November 6, 2013

Ericsson Investor Conference: Growing Twice as Fast as Market, Services & Support

Ericsson presented an update on its business fundamentals, market outlook, competitive positioning and investment strategy at its annual Investor Day conference in Stockholm.

"Looking at sales growth in a longer perspective, it is encouraging to see that we grew twice as fast as the market in 2010-2012, currency adjusted. This is proof that our strategy is effective and that we are delivering real value to our customers,"
stated Hans Vestberg, Ericsson's CEO.

Some notes on the event:

  • Ericsson's key competitive assets are (1) Technology leadership (2) Services leadership (3) Global scale.
  • Ericsson expects steady growth across all areas with no major changes in figures for the main compound annual growth rates (CAGR), compared with last year. Ericsson estimates that the total network equipment market will show a CAGR of 3-5%; telecom services is estimated to show a CAGR of 5-7%; and the market for support solutions is forecasted to show a CAGR of 9-11%.
  • Over 1 billion subscribers currently are directly managed by Ericsson and 2.5 billion subscribers are supported.
  • Ericsson has 64,000 service professionals in the field.  It has 114,00 employees in total in 180 countries. About 24,000 employees are in R&D.
  • 50% of LTE smartphone traffic traverses Ericsson equipment.
  • In the TV & Media Business, where Ericsson has recently acquired Microsoft's Mediaroom division, Ericsson claims 25% IPTV market share with over 13 million subscribers.
  • In patent licensing, Ericsson earned SEK 6.6 billion (US$1.02 billion) in 2012.  LTE smartphone uptake is a key driver going forward.
  • Services revenue will likely continue to increase as a % of total sales over time.  Software sales will also gradually increase as the company evolves.

  • Managed Services deals are characterized by long-term engagements, multi-vendor deployments, customer OPEX savings, and high renewal rates.  Ericsson's global scale is a key advantage.
  • By 2019, Ericsson expects about 65% of the world's population will be covered by LTE.
  • Ericsson invests 14.4% of its revenue in R&D.  About 80% of R&D is now focused on software.
  • The concept of "network slicing" will be key for how Service Provider leverage SDN and the cloud.
  • Service Provider networks need to become media-aware.
  • 5G, which is now in the earliest development stages, will aim for high-capacity, coverage everywhere, super low-latency, super high-speed and cost efficiency.
  • 70% of mobile traffic is generated indoors.
  • Ericsson now has 78 contracts for its SSR and 39 live networks.
  • Ericsson now has 21 VoLTE/ISMs contracts.