Inside Ericsson’s Enterprise Push and AI-Driven 5G Solutions

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the two hundred and sixty second episode of The Week with Roger, a conversation between analysts about all things telecom, media and technology by Recon Analytics. I'm Don Kellogg and with me this week are my esteemed colleagues, Darryl Schuler and Jay Cockridge. Gentlemen, how are you doing?

Roger Entner 0m26s

Good, thank you. Yeah, I'm doing well.

Don Kellogg 0m29s

Yeah, so you guys recently went to enterprise event put on by Ericsson. Thought we could spend a little time talking about it. What were your thoughts? Give us an intro on kind of what the event was all about.

Roger Entner 0m41s

So it was focused on the solutions that they're either taking directly towards enterprises or they're working with service providers to get to the enterprise. So I mean, I think that's one important distinction for the audience to realize when we're talking about the enterprise and what Ericsson's doing. It is not always about using the service side. They can be part of the chain, they're not always part of the discussion that was had there. And I think it's also important to dealing with something Ericsson Enterprise, why are they talking about this, why it's so important.

Roger Entner 1m14s

I think it's important also to take a step back and look at the entire context of what's going on.

Guest Speaker 1m20s

I mean, because if you

Roger Entner 1m21s

look at their revenues, it's kind of flattish. And the prospects in terms of their core market, which is selling large scale gear to mobile operators, doesn't appear to be getting better anytime soon. In fact, it could get worse because there's definitely rumors coming out of China that Ericsson is going to eventually be totally locked out of that market. So while I think right now it's like 3% or 4% of their revenues, those in the minority, it's not like the North American market. Still when everything else is flat and someone takes away 3% to 4%, that sort of leave a mark.

Roger Entner 1m56s

And so Ericsson is not new this year. They've been working towards building up more of their enterprise presence as a different revenue diversification, as a way they can help make their CSPs stronger, but also help make their own bottom line stronger as well. And so that's kind of why they focused a lot on the enterprise. That's why the entire Boston event was about enterprise communications and the different things that they're doing.

Don Kellogg 2m22s

So what is focusing on the enterprise mean from a practical perspective for Ericsson? Like what are they doing here?

Roger Entner 2m27s

Several things. I mean, of the areas that so the areas that they really focused on, I'll say mission critical communications. So that's like a specific enterprise type solution. It's not always like when I think of sometimes from my own background, enterprise being the land. But when they're saying really more it's like a specific industry vertical, an enterprise vertical.

Roger Entner 2m45s

Obviously Vonage time spent on that because that is a communications platform, but it's also playing into network APIs, which they're very much involved in and made a big bet on as well. Private networks was a big portion of it. They spent the time showing how they are really ramping up more in that area, becoming a stronger competitor in the area. I'm trying to remember what the exact number was, but one of the things they did highlight when they talk about now about the number of commercial deployments that they have that are private networks. And, Jake, please correct me if I'm wrong.

Roger Entner 3m17s

Was it, 80% or 90% of those are now really full scale networks? They're not

Guest Speaker 3m22s

It was 90% was the number that they they cited.

Roger Entner 3m26s

So that was a big part of it. Wireless WAN as well. They've made some acquisitions in there in terms of wireless WAN service as well. Again, using oftentimes cellular technology, but it's more on the wireless area. So if you think about in building communication, say things in the manufacturing area or even some of the communication stuff that goes back to critical communications that you say you see in the police car for connecting back to the network.

Roger Entner 3m53s

That was another part of what their story was. And also the five gs core is important because that's really what enables all of this. Mean so when you look at say a mobile network, the two major components and I apologize to people who are in the transport business, but the two major components is really the radio, so the base station, and the core. And the core is the brain. That's what controls the services and the access and which parts of the network people have access to.

Roger Entner 4m23s

And so they spent quite a bit of time talking about that. And of course, AI had a big presence there, as you'd expect at any of these types of events these days.

Don Kellogg 4m32s

Anything nowadays, if it doesn't have AI in it, it's not worth talking about. Right?

Roger Entner 4m36s

I think all companies are contractually obligated to mention AI at least once every month.

Don Kellogg 4m41s

So how much of this is in market today versus concept? Like, where are we on the road map with what they're talking about here?

Guest Speaker 4m48s

I think it depends, you know, which of these solutions we're talking about. Right? I mean, I think one that I'll bring up was this new joint venture that they actually announced last year at the same event. That point, you know, it was they were calling it NewCo, and now they're calling it Paduna. Right?

Guest Speaker 5m8s

And this is basically a way for it's all about programmable networks, right, programmable platforms. And it's a joint venture between a number of different, you know, equity groups alongside providers globally. And it, like, uses camera standards so that developers can write network APIs and use them across networks with different carriers. Right? So the goal is they write something once, and then they can deploy it across multiple networks, which, you know, adds scalability and makes it more feasible for developers to kind of work with network APIs.

Guest Speaker 5m47s

And when they rolled it out last year, right, and it was literally they were announcing it. And now it's grown. You know, I think they're up to, like, 85 standalone five g networks in the footprint. I think there's 12 commercial partners and, like, 13 developer platforms connected that they referenced. And they have four network APIs in market that are actually have revenue, which doesn't sound like a ton, but this is up from zero.

Guest Speaker 6m13s

Right? So the momentum's picking up and it it is growing.

Roger Entner 6m17s

Yeah. So I mean, that definitely, it's there, but it's in very much in the early stages still, like Jake was saying, that they're just kind of getting it going. They're building the ecosystem. It's been a challenge. Have to get all the operators to agree.

Roger Entner 6m29s

And then you have to get, honestly, the application developers to buy into it to get them to come together, really get everything going. So that's still a work in progress, but it is making progress, actually. I mean, like they said, they do actually have some commercial solutions out there, which is a big step forward.

Guest Speaker 6m47s

Yeah. And then with the private networks, they referenced a number of in production examples. You know, there's some of the things you might expect, right, like cargo, you know, shipping cargo, mines, factories. Right? They give some pretty impressive stats about some of these things.

Guest Speaker 7m5s

Like, Lufthansa Cargo. Right? You know, they reduced infrastructure by 88%, they said, and they basically doubled through for cargo scanning with less infrastructure. Right? And they, like, referenced a mining company that they moved to a private five g network.

Guest Speaker 7m20s

And in some of their metrics, it's up, like, 10% 10 times rather. So there are a number of private networks in place, but it's in the areas that you would expect. And I feel like we've been hearing about where it makes sense.

Don Kellogg 7m33s

Primarily industrial use cases, think, is where we're seeing seeing private networks.

Guest Speaker 7m37s

Exactly. Exactly. Like, it doesn't feel like it's that widespread outside of those use cases, but where they are getting traction there, they're seeing really good proof points is what we were hearing.

Roger Entner 7m49s

Yeah. I mean, definitely, I think, one thing for people, private networks are not for everyone. And the examples that I gave are in areas where the companies that we're working with have deep pockets, lots of resources out there. So while they may not be hundreds of millions of private networks, The private networks that are out there are large.

Don Kellogg 8m11s

So what was your reaction to the event? Like kind of what are the key takeaways here? What should listeners know about what they presented, what's relevant, that sort of thing?

Guest Speaker 8m20s

I've been to a few of these events now. And, you know, Ericsson, they're really five g evangelists. You know, the technology is very impressive. They're doing a lot of cool things. I just don't know how wide scale a lot of them will ever be.

Guest Speaker 8m34s

Right? You know, as as Daryl was just saying, it's like these really large enterprise use cases with a lot of it. You know, hopefully, the network APIs pick up. And I think they're on track there, which would be cool and I think would be more accessible to a lot of folks as these APIs ramp up, especially, you know, things for, like, fraud detection and identifying yourself and everything. There's there's some really cool ways to use networks for that that they referenced, and those are more broad use cases.

Guest Speaker 9m1s

Another topic that they went pretty deeply into were five g laptops. Right? And they had someone from HP, a manufacturer from HP there, who has a partnership with T Mobile. And, you know, it sounds like it's a really cool solution, but one that, you know, I don't think, you know, outside of large enterprises with, you know, traveling workforces, like most small and mid market businesses aren't necessarily gonna pay for it. Right?

Guest Speaker 9m30s

So I just personally am not sure how wide scale some of the use cases that they have for five g right now will ever become as cool as they may be. And that's kind of my reaction walking away. I don't know, Daryl, did you have anything different than that?

Roger Entner 9m44s

No, I agree with that. I think that a little bit of challenges they're facing, going back to what I said about the context, if the operators aren't spending, they're trying to come up with other things to offset that, continue obviously positive revenues for them. But the challenge is kind of like to replace one thing, they're looking at a dozen other things that hopefully in the aggregate can replace their big bread and butter which is selling to the mobile operators, the big gear, the big layout. And that's obviously a challenge because while generally I feel like most of the stuff that they're showing is real and there's a market for it, it's going to take a long time to develop and the actual sizes of these markets are certainly going to be limited.

Don Kellogg 10m25s

Right. I mean, we're well into five gs in The US, right? But I mean, isn't there a good portion of the world that's still kind of holding their breath and potentially waiting for kind of 5.5 gs so to speak, Or five gs advanced to pull the trigger?

Roger Entner 10m38s

Yeah, and one of the other big things going back is just the fact that so many with what they've been trying to achieve with five gs and five gs was really about the enterprise itself so this fits together. But the challenge that has been out there before is really kind of going back to like the old chip in the egg things. They need operators who say they have five gs not just to do it at the RAN level. They've got to deploy the core which has been slowing down. So before they have the core, lot of the things they're talking about can't be done by an operator.

Roger Entner 11m6s

Unfortunately, lot of operators aren't deploying the core because they don't see the money from those services yet to justify the investment in the core. They're very focused on consumer and enhanced mobile broadband and that's it. So that's been a big challenge there. There was a slide that they had early on in the first round that also kind of shows the other challenges. How much of what we're talking about here is interconnected?

Roger Entner 11m30s

Where they're talking about, of course you got to deploy the mobile network. Then you need to go with the core, make sure the core is cloud native. And with that then you have the increasing role of AI and you have to get all those kinds of parts working together to really do a lot of the things that they want to do to drive revenues for themselves and for their customers, especially in that network API area.

Don Kellogg 11m51s

Right. I think when the carriers have done that has I think confused consumers a lot is wrapping the four gs with five gs and calling it five gs in a lot of cases without that five gs core, as you say, Daryl, a lot of the, not to use a pun, but core functionality, right? Like it sits inside of being part of that brain, right? And so just wrapping five gs around a four gs core doesn't always get you there.

Roger Entner 12m13s

Yeah. And also when you just look at the legacy of a lot of operators in general, I mean, what 80 some percent of their money comes from consumers. But a lot of five g is based off of going up the enterprise, that other part, that 20% or less part. And operators are also very good at doing stuff in volume but like Jacob's on the private network, these are very bespoke and specific networks. These aren't repeatable.

Roger Entner 12m35s

This isn't going to the store and selling a bunch of SIM cards and smartphones. This is let's spend a year building something for some port or for some mine. It's a totally different mindset.

Guest Speaker 12m47s

Right. But a fascinating one, and it's really cool to learn. Like, it's a great event, and it is really cool to learn about these industrial use cases where, like, you know, these five g private networks have these huge benefits. Right? But it is, yeah, very bespoke, very large scale deployments that they're typically talking about.

Don Kellogg 13m6s

Well, not everybody is gonna, you know, spend the scratch to spin up their own wireless network. Right?

Guest Speaker 13m12s

It wouldn't work for us if they'd gone. Right.

Roger Entner 13m15s

I am impressed with the movement that we made over the last year when it comes to private networks. My opinion that they really seem to really starting to get some good traction in that area.

Don Kellogg 13m25s

Well, and as you say, are large deployments, right? It takes time to conceptualize and build these things out, right? It doesn't happen overnight.

Roger Entner 13m32s

And I think they know a lot of the key points and tell us what you'd expect, the use of AI or agentic AI to simplify the process because these are complicated solutions that people are working with. So using that is definitely moving in the right area in terms of you got to simplify these solutions down to help create greater adoption.

Don Kellogg 13m55s

Alright. Well, thanks, gents. I appreciate you guys taking the time this week. Roger's been a little out of pocket. So thanks for hopping on and telling us all about the Ericsson Enterprise event.

Don Kellogg 14m4s

Certainly.

Guest Speaker 14m5s

Yeah. Always great to be on. Thank you.