Swedish kit vendor Ericsson has created two new divisions in order to capitalise on cloud-native networking and the adoption of private mobile networks.
It is part of a broader corporate re-jig that also aims to simplify the vendor’s operations. It also heralds the departure of Ericsson veteran and current head of Europe and Latin America Arun Bansal.
The first of the new divisions is called Business Area Cloud Software and Services, and is the result of a merger between Ericsson’s struggling Digital Services, and Managed Services divisions.
The new unit will “provide solutions that will help our customers automate the increasingly complex networks for cost advantages and speed to market,” explained Ericsson CEO Börje Ekholm, in a statement on Wednesday. “By combining the two business areas we can coordinate our investments in orchestration and AI solutions leveraging insight from our network operations. This will allow us to remain a technology leader in a constantly evolving market.”
Indeed, with 5G non-standalone (5G NSA) deployments showing signs of maturity in multiple major markets, the focus is shifting to 5G standalone (5G SA), which is driving the adoption of cloud-native core network architecture.
Cloud Software and Services will be led by Per Narvinger, who until now has been in charge of the networks products team within Ericsson’s networks business. Peter Laurin, who currently heads up Managed Services, is on his way out, with Ericsson having announced in April his plans to depart this summer. Meanwhile, Jan Karlsson, who led Digital Services, has been reassigned to Ericsson’s Global Network Platform division, and will report to Ekholm.
The other new division Ericsson unveiled on Wednesday is called Business Area Enterprise Wireless Solutions. It brings together its private mobile networking business, called Dedicated Networks, and the wireless edge networking assets it acquired when it bought US-based Cradlepoint in 2020. The aim here is to sell to directly to enterprises that want to take advantage of these budding technologies. Cradlepoint CEO George Mulhern has been put in charge of this particular new division.
“The new Business Area Enterprise Wireless Solutions will provide the focus and conditions we need to thrive in the enterprise market and secure the next wave of success for this business,” Ekholm said.
There is a lot of buzz about enterprise uptake of private mobile networking. IDC expects global private LTE/5G infrastructure revenues will surge to $8.3 billion by 2026, from $1.7 billion in 2021. And when it comes to edge hardware, software and services, the analyst firm reckons global spending will come in at $176 billion this year, rising to $274 billion by 2025.
Between the trend towards cloud-native networking and these eye-watering forecasts for private and edge networking, it is little wonder that Ericsson wants to reorientate itself so it can take full advantage of these opportunities.
Ramping up these growth areas might also offset some of the uncertainty that has affected its performance so far this year. As revealed in its most recent financial report, the underlying business is ticking along quite nicely. However, its numbers were hit by the complete suspension of its operations in Russia, and the need to increase inventory due to ongoing concerns about component shortages.
Ericsson also wants to become a more efficient organisation, and to that end – in addition to the new business areas – the vendor has also launched a third new division called Group Function Global Operations. It brings together Ericsson’s sourcing, IT, digital transformation, group sales, and real estate operations, as well as elements of its HR and finance teams, into a single global division.
“Global Operations is created to achieve best-in class customer and employee experience by simplifying and digitalising end-to-end process flows in the company,” said Ekholm. “By creating this function, we will be able to better serve the needs of our customers and better support our people, making us more agile and more competitive.”
Alongside the restructuring, Ericsson announced the immediate departure of Arun Bansal, who joined Ericsson in 1995 and for the last five years has served as head of its Europe and LatAm business. It will be interesting to see where he turns up next.
Ekholm said Bansal “has been instrumental in driving change across the organisation, and in establishing and nurturing some of our most important customer relationships. I wish Arun all the best in his future endeavours.” His replacement has yet to be announced.
“After turning around the company, Ericsson is entering a new phase of growth,” concluded Ekholm. “The changed group structure that we announce today represents exciting opportunities for our people, our customers and our business and will allow us to continue to grow our core mobile infrastructure business and capitalize on the fast-growing enterprise market.
“Within 2-3 years, we want to achieve our long-term goal of growing faster than the market and an EBITA margin (excluding restructuring costs) of 15-18% for the Group. I look forward to working together with the new Executive Team, and the whole Ericsson team, as we accelerate our work to execute on our strategy, strengthen our company culture and continue to grow the company with increased profitability.”