Private networks are not a niche, says Ericsson; they are the route to new markets, new buyers, and a third growth engine beyond the industry’s cyclical capex grind. Åsa Tamsons, in charge of enterprise wireless, sets out the firm’s strategy in clear terms – and casts a light on Nokia’s retreat from the market.
In sum – what to know:
A strategy, not a side bet – Ericsson positions its enterprise business – including private networks – as a way to diversify revenues beyond old 3GPP cycles.
A platform, not a product – Ericsson wants a programmable 5G/6G platform for operators, developers, enterprises – combined as a multi-speed growth engine.
A market, not a niche – Digital change and physical AI will only scale with ubiquitous cellular connectivity, the firm says; it will take time, but it’s a whole market.
If you are interested in private networks, physical AI, industrial IoT, and all that good stuff – or broader brush strokes about digital change, or weird pen portraits about vendor dynamics – then here is a quick excerpt from an excellent conversation with Ericsson, during the late-winter sun in Barcelona in early March (at MWC). It paints a picture of the Swedish firm’s strategy in the enterprise space – and throws Nokia’s into relief. Because unlike its oldest rival, Ericsson is not messing about with private networks. Alongside its traditional carrier business and its collaborative developer proposition, its enterprise team is building a multi-geared 5G/6G revenue engine, where each function flexes with demand, and the whole unit moves faster than the standard 3GPP swap-out cycle.
That is how Åsa Tamsons, senior vice president and head of enterprise wireless solutions at Ericsson, tells it – six weeks ago at MWC – when presented by RCR with a rather garbled thesis about the state of the private networks market, and a question about Ericsson’s position within it. Note, this article takes Tamsons’ response to a single question, as transcribed below; the rest of the interview will be written tomorrow (or next week). The question references Nokia’s pending exit from the private networks market, of course – on the grounds the Finnish firm has been the top dog, until now, and Ericsson has been rather cautious, until 12-18 months ago; and because their contradictory positions, now, say something about the market, or else something about each other.
But really, the question to Ericsson – in light of everything, including the perceived niche-market syndrome that has infected the industry following the Nokia news – is simply this: is the enterprise segment a central and future pillar of Ericsson’s corporate strategy, or just a side bet? Tamsons zooms out, and takes in the whole Ericsson pitch, including its parallel enterprise-application play with developers (managed by Niklas Heuveldop, senior vice president of its ‘global comms platform’ and chief of its Vonage business; referenced below). She answers, as follows…
“Absolutely. We had a session for investment analysts yesterday, and half of it was about enterprises – as served by the ‘business areas’ that Niklas and I run. So we are clear: firstly, yes, that we are a mobile company, which believes in wireless, and which believes in hybrid connectivity beyond just fixed [networks]. Fixed, too; but where Ericsson has invested, and where it has leadership, and where it continues to invest and have leadership, is in 5G and 6G – to have the strongest wireless platform there is. Because this is a platform game, about how differentiated programmable cellular connectivity is consumed – by developers, per our Vonage investment and everything with Aduna; by enterprises, per the solutions on my side of the house; and by carriers, by providing the best networks.
“We are also very clear: we build mobile connectivity, in particular 5G, evolving to 6G, not only for consumers, but for enterprises – to transform industries. It is very strategic to make sure that happens. That is the intention of the business. And it is important because it opens new growth markets – new types of buyers, and ways to diversify our revenue base. On one side, we are world leaders. But this is a cyclical cap-ex business. With our enterprise and Vonage / API businesses, we can sell [more widely]. We get three revenue-stream cycles. It is very strategic. And on the enterprise side, across software content (APIs) and hardware (networks), the value for the enterprise goes up. So we have quite an interesting margin portfolio. [But we are also] building new categories.
“The need [for private and neutral-host networks] is there, but it is new. You could argue that, yesterday, cellular was a niche in the (industrial) production industry. But we have the proof points now to think it will be the category to scale operational capabilities. Same on the network API side – which is changing an industry completely, around how things are sold and monetized. It is [about] creating a market, and not just a category. All [of these business areas] have different time horizons, but they are equally important to Ericsson – especially if you think about how we capture growth and value long-term, and how we spread [cellular] so it becomes ubiquitous. These are the ways we will deliver value to customers and shareholders – because they will generate new business value.
“And fundamentally, if we think about digital transformation and physical AI, in any shape or form – if those things are going to scale, then you need connectivity.”
