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Introduction

Ericsson has made bold moves in the past several years to diversify its services offering. Its excursion into IT services and adjacent verticals faltered under competitive pressure in a consolidating sector.

Highlights

  • Services are to be anchored by product and those services that don’t contribute to both top and bottom lines are unsustainable.
  • Ericsson’s diversification into non-telco and broader IT services has already been scaled back. The vendor has already exited, completed, or transformed contracts that are no longer in line with the strategic intent.
  •  The focus moving forward is communications service providers (CSPs) and networks, with SDN and 5G the core focus in the short term and IoT a growing focus in the longer term.

Features and Benefits

  • Assesses Ericsson's current position with respect to service offerings
  • Assesses the relative simplicity of the networks services market as opposed to the IT services market

Key questions answered

  • How does Ericsson view the RAN market in coming years?
  • What services will Ericsson offer now?
  • What is Ericsson's focus for the short term and medium term?

Table of contents

Summary

  • Catalyst
  • Ovum view
  • Key messages

Recommendations

  • Recommendations for Ericsson
  • Recommendations for vendors

Big changes were set in motion at Ericsson in 2017

  • Services have not delivered profits or margins – the exception is network services
  • Communications service providers (CSPs) are the focus for the indefinite future
  • Software deployment is favored over bespoke development
  • Service lines’ margins are to be prioritized over revenue growth

IT services is highly competitive, especially in the telecoms vertical

  • Ericsson tried to enter a tough market at a tough time
  • The telecoms vertical presents compounded competitive challenges in IT services
  • Network services has a small number of players

Ericsson’s current scale back “for now” does not preclude a services resurgence in the future

  • Ericsson has braced itself for one more challenging year
  • Market perceptions of NEVs are encouraging
  • Ericsson’s R&D lifeline is strengthened

Appendix

  • Further reading
  • Author

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