by Francis Haysom, Principal Analyst, ARG
Last week’s announcement by Ericsson seems to signal the scaling down of their ambitions in media and consulting/systems integration. Ericsson has been forced to scale back its ambitions and retrench around its core network business. The new focus areas of digital services and IoT have a natural fit with the stated aspirations of most telco customers. The obvious hope is that these can provide growth to support an increasingly tough network sector.
The challenge with these new areas is that their growth, like media and consulting/systems integration before, does not have a natural fit to the existing way of selling network equipment to network operators.
Telcos have been talking ‘digital services’ for years but the true growth in digital services has been within new web scale players who build on top of the commoditised network. Telcos with their inherent regional fragmentation and limited reach fail against the worldwide scale of the web players.
IoT similarly is more than network and is not simply a single sector. Whilst an energy and automotive application may technically use common IoT components and network connectivity the IoT application is industry specific and needs to be sold that way.
To succeed in these two areas Ericsson needs to radically change the default telco way it engages with these sectors. Ericsson needs to be more than a provider of digital services or IoT to telcos. Ericsson needs to engage beyond its comfort zone, in sectors where it is not the dominant provider.
As highlighted in Appledore’s research note on Digital Collaboration, Ericsson needs to help network operators overcome their inherent fragmentation and compete effectively at scale in global digital services.
Ericsson needs to similarly support new IoT business models appropriate to different industry sectors and to support telcos in having value in these sectors beyond simply IoT connectivity. IoT business models is an Appledore research focus in 2017.