In an exclusive interview with Telecom Review during LEAP 2023, Börje Ekholm, president and CEO at Ericsson, talks about the importance of maintaining technology leadership and enabling enterprise.
Following the 2022 full-year results, you stated that Ericsson's strategy remains focused on driving sustainable growth. What are the steps you’ll take in 2023 to achieve this?
As a company, we've been focused on mobile networks as our core business, and that is where we spend most of our R&D money and most of our company effort. But we also need to start to broaden our company for the longer term. We can broaden ourselves as a company with the legitimacy of our technology leadership on 5G into the enterprise field, and that is what we're trying to do this year. We took some major steps in 2022. First of all, the formation of enterprise wireless solutions, which is our Cradlepoint wireless Vonage combined with dedicated networks, but also the expansion through the acquisition of Vonage into the platform economy. We see these two steps as major ventures into enterprise. Since we invest in the product portfolio, I would add the importance of sustainability. Driving energy efficiency in our product portfolio is critical. And that's an area that we have invested a lot in and continue to invest in. So by combining these two aspects, we can have a more sustainable company and also create a longer term growth profile by combining the telco market and the enterprise market.
Ericsson has been making network modernization a top priority. Can you share the motivation behind this and how it will affect the global 5G rollout and widespread enterprise digitalization?
Network modernization is critical. When it comes to networks, we are starting to see increasing demand for data from the end consumer. Data continues to grow very strongly. Maybe sometimes the growth rate comes off a bit, but it's still in absolute numbers with very high growth. There is a need for operators, the CSPs to basically produce the bit going forward, while maintaining customer satisfaction and being also energy efficient. So, unless you modernize the network, there is a risk that, first of all, the performance will deteriorate and the cost will go up. We see that there is a need to modernize the networks, and that is what our specific focus is on. When you modernize the networks, we have to prepare for 5G. For us, it's kind of a natural progression for the service providers to start modernizing and then prepare for 5G.
How will Ericsson’s Vonage acquisition leverage the power of the cloud and 5G together and unlock new layers of innovation for consumers and enterprises?
This is a critical part, and I'm very happy you asked that. We envision the future networks with a horizontal capability that can touch many different use cases, [from] mission critical and regular consumer use cases to enterprise and emergency use cases. All of them can leverage from the horizontal network platform. But with 5G, and especially 5G standalone, there are going to be specific features available — call it speed, call it latency, call it authentication — that you want to be able to call up to applications. So basically, there is a need for simple APIs that application developers who develop the vertical use cases can call up from the network that requires you to 1) develop the APIs and 2) expose them. You need to be able to charge for them, and you need to be able to consume them in an easy way. That's why the Vonage acquisition provides us with that horizontal layer, the CpaaS platform, that will allow us to both present or expose, consume, and monetize the APIs. So in the longer term, we see the Vonage and CPaaS platform as a critical way for the service providers to monetize the network investments that they are making today.
You are now the owner of a global CPaaS platform. Are you competing with your own customers, like Verizon, who are offering the services as BlueJeans? How will you balance out external relationships?
The interesting part is that the Vonage solution is really geared towards SMEs, and actually, that's a bit of a different market. We work together with other collaborative software providers to incorporate the Vonage solution there, and that is actually addressing a different market need than the big companies do. Why are we excited about that? To be honest, 5G will start to digitalize SMEs first. The benefit of 5G is that you get capacity wherever you are. So you don't even need the local area network. The Vonage UCaas/CaaS is tailor-made for SMEs, and it’s actually easier for them to deploy with better functionality and [a more] suitable solution for SMEs.
We see great interest from the service providers to go there. But the strategic reason for buying Vonage is for the CPaaS platform because that will allow us to monetize the APIs from the network. It's a very different way of thinking. The telco industry is used to thinking about subscriptions, but the reality is we need to be able to monetize the features of 5G. Otherwise, why would anyone build out 5G? I do believe that it's critical that we're able to sell those specific features in a better way. Vonage gives us the CPaaS platform, which is critical, and also gives us a million developers, and that's also going to be critical.
How do you see the Middle East market influencing Ericsson's progress in developing and deploying state-of-the-art 5G products and solutions?
The Middle East region was a front-runner in launching 5G globally with reasonable coverage and good network performance. A year after 5G was launched globally, speed tests were conducted in Korea and the Middle East. So, the Middle East is actually a front-runner in the 5G market, and that's why it's important for us to be here. The Kingdom’s Vision 2030 provides a strong commitment to infrastructure, and the digital infrastructure is critical for the digital transformation. We want to be stronger in this market which has influenced the global roadmap as a front-runner market.
In line with your fireside chat, can you elaborate on how technology powers a bright future and how Ericsson significantly contributes to this?
I am a big believer that technology is a force for good. Communication improves lives. Now, you can communicate with your children, parents, friends and colleagues, and we can do e-commerce. We could migrate during COVID from being in the office to working from home. It actually changes and improves an individual's life. The next part is that technology is going to change businesses. The way we operate companies in the future is going to be different. We will connect everything in the supply chain. The supply chain will be much more agile and flexible, and allow us to be more quality asset efficient and energy efficient in the whole supply chain by reducing carbon generation. I think telecommunications is critical [in order] to create a sustainable future. If you look at the ICT industry, it contributes around 1.5% of greenhouse gases, but we can lower greenhouse gases by 15%. So, it's a 10x kind of catalyst, which is really important and really big.
How long do you think we are from becoming a digital business society?
I think it's still many years to go, and it will take time. We will need to change processes. However, it’s interesting to think about the consumer. We started to digitalize the consumer market basically 10 to 15 years ago, and it is almost digitalized today. So, 15 years ago, we had photo albums, we had the digital cameras, we had DVDs on the wall. We had CD players at home, and we stored documents in binders on the shelf. Today, we use social media to interact with friends. We don't send postcards anymore. We have no photo albums. The DVD and CD are streamed. So everything is digitalized now. 4G allowed us to digitalize consumers. Now we are digitalizing enterprise. It’s probably going to take a similar timeframe, but we need to start.
In a highly competitive sector, how will Ericsson maintain its notable reputation while ensuring security and profitability for users and partners alike?
This is a major question. We often say that to be a tech or industry leader, you need to be a market leader. You need to be a leader in technology, and you need to be a leader in how you conduct your business. We are investing in all those areas to strengthen our position in the market, but we also continue to invest in technology leadership. We need to do that to drive cost and to drive performance for our customers. And lastly, we invest in how we run the company. So we're really focused on making sure ethics and compliance are fully integrated into everything we do in the company. When we succeed on these three aspects, we are a true industry leader.
What do you think is the reason behind the unprecedented growth of the OpenAI chatbot service, ChatGPT?
I think it is an interesting development. So what is the killer app? Nobody has any idea. In five years, I will tell you what the killer app was. It may be the generative AI because that's going to drive such a massive amount of data into every device as well as massive traffic to the network.