Networked society

Ericsson president and CEO, Hans Vestberg has reiterated his outlook that HSPA and 3G would remain his company’s main revenue generators in 2011, with LTE equipment becoming a more significant source of income in the 2012-14 timeframe. In the meantime, the manufacturer believes the combination of mobility, broadband, and cloud services forms the cornerstones of its vision to help create the networked society of the future

Vestberg believes that in the coming 10-20 years the networked society shall become a fully-functioning reality whereby everything that benefits from being connected to a network will be

Mobile broadband was the key to Ericsson’s business in 2010, and Hans Vestberg believes that in the coming 10-20 years the networked society shall become a fully-functioning reality whereby everything that benefits from being connected to a network will be. Ericsson forecasts as many as 50 billion connected devices in existence by 2020, the majority of them being utilised to undertake machine-to-machine (M2M)-type applications.

“There were 600 million mobile broadband subscriptions at the end of 2010, and we forecast that number will reach a billion in 2011, and five billion in 2016,” Vestberg said. “We forecast 25 times higher data usage in networks in 2015,” he added.

Thus the mobile broadband opportunity is clear to see as the number of smartphones in the market in 2010 exceeded 500 million, and with industry forecasts that by 2016 smartphone data traffic will equal PC traffic.

Ericsson is positioning itself to reap the benefits from the growth of M2M connections, having announced its Device Connection Platform, which will be offered to telecom operators, helping establish M2M services tailored towards operators’ enterprise customers. The platform is being brought to market in a Software as a Service (SaaS) business model, offering operators benefits such as a low initial investment in technology and a fast time to market.

The cost of cellular M2M modules is estimated to be falling at an annual rate of 15 per cent, which makes connectivity-based services increasingly affordable. The cost of connectivity is already as low as US$1.4 per gigabyte

It is envisioned that the increased dependence on mobile systems will introduce demands for constant availability, resilience, coverage, latency and bandwidth. These demands, in turn, necessitate service level agreements and policy-enforcement solutions to ensure that the application can be run cost-efficiently and in accordance with agreements. Ericsson is playing an instrumental role in enabling these factors to come together.

And while the global economic crisis that erupted in 2008 has had an impact on the commercialisation of LTE by network operators around the world, Ericsson believes it remains important to maintain a market leadership position in this space. The manufacturer has seen 17 LTE networks deployed in 12 countries and estimates it has captured 100 million of the 150 million LTE subscribers globally at the end of 2010.

“Managed services also continues to be a large component of our business,” Vestberg said. “We entered into 54 new management services contracts in 2010.” The provision of hosted services is an area Ericsson has been involved in for some time, and as it evolves into the offer of cloud services Ericsson believes it is well-positioned to capture a significant proportion of this growth area.

The announcement of a strategic alliance formed with Akamai, the leading content deliverer, to bring to market mobile cloud acceleration solutions aimed at improving end-user Internet experiences such as mobile e-commerce, enterprise applications and Internet content, is a clear indication of Ericsson’s intent to be relevant across the entire cloud delivery chain.

Ericsson and Akamai will jointly develop solutions for the fast-growing market of content and applications delivered to mobile devices. As leaders in their respective fields, the two companies are looking to bring together the power of mobile networks and the cloud to open new business opportunities for both operators and content providers by creating a new business model built around quality of experience and premium services.