Telefonaktiebolaget LM Ericsson (publ) (ERIC - Free Report) recently launched verified Network Functions Virtualization infrastructure (“NFVi”) solution, thus crossing another milestone in the 5G space and strengthening its Internet of Things (“IoT’) lineup.
The Swedish communication technology and services giant’s NFVi solution is a key building block for 5G infrastructure and comes with multivendor capabilities and a transformation service offering.
Ericsson Brings Live Commercial Deployments of NFV
The NFVi solution is a pre-integrated and verified platform, built on Ericsson's Hyperscale Datacenter System 8000 and Blade Server Platform hardware, Cloud Execution Environment, Cloud Manager, Cloud SDN and consulting, system integration and support services. Various types of deployments, including decoupling of NFV components and full stack solution, can be supported by using this solution. Also, it can enhance the flexibility during Virtual Network Functions (VNFs) deployments.
Ericsson, having pioneered live commercial deployments of NFV, already announced multiple NFV contracts with leading telecom operators, including Telstra, Swisscom, Telefonica, Axiata, Digicel and SoftBank. In addition, according to the research of information and market research firm – Technology Business Research (“TBR”) – premium telecom operators think Ericsson is the ideal supplier to address contemporary NFV and SDN requirements.
Moreover, leveraging on the NFVi solution, operators can introduce a host of new products and services in the IoT environment, thus boosting customer satisfaction. Eventually, Ericsson’s clients can achieve a shorter time to market, increased speed, agility and efficiency, while deploying new services.
Fostering 5G Development for Future
Promotion of 5G development is part of Ericsson’s three-pronged “core business growth”, the other two being targeted growth and cost & efficiency program. According to the company’s latest mobility report, there will be 550 million 5G subscriptions in 2022, with North America being at the top, where a quarter of all mobile subscriptions are expected to be for 5G. Further, the company believes that there will be 29 billion connected devices by 2022, of which around 18 billion related to the Internet of Things (IoT).
To bank upon the commercialization of 5G technology, the company has signed significant 5G agreements with telecom biggies like Vodafone Group (VOD - Free Report) and Qualcomm Inc. (QCOM - Free Report) . We believe that strategic partnerships and dominant market share will help the company benefit significantly from the commercialization of the networks, starting 2020.
Moreover, during the fourth quarter, it conducted an advanced 5G outdoor mobility trial, in conjunction with SK Telecom and BMW, collaborated with French telecommunications firm Orange for the development and testing of 5G use cases and services. It entered into an agreement with NTT DOCOMO and Intel Corporation (INTC - Free Report) to advance 5G development.
Near-Term Headwinds Hurt Prospects
Despite the rapid traction of 5G adoption, adverse industry trends as well as sluggish growth in countries like Brazil, Russia and the Middle East are proving to be a major concern for the company in the near term. In addition, uncertainty in the financial markets and reduced consumer telecom spending, delayed auctions of spectrums pose significant threats for Ericsson. Moreover, stiff competition and the ongoing industry consolidation among customers and major rivals are posing a threat to Ericsson.
According to industry tracker HIS, in recent years, Ericsson has lost significant market share to China’s Huawei and ZTE Corp., with its global market share in mobile-infrastructure equipment falling from 40.4% in 2011 to 28.1% in 2015. In addition, the Zacks Rank #4 (Sell) company’s savings plans and job reductions are proving to be inadequate to offset the swiftly declining product demand.
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