5G is gaining momentum globally and is starting to see interest from consumers, which is helping the company’s turnaround, Börje Ekholm, Ericsson president & CEO told the company’s second quarter 2019 earnings call.
“We see some operators realizing a price premium for their premium services that 5G can give,” Ekholm said. “We’re starting to see that the increased investments we have made in technology leadership coming to fruition in increased competitiveness as well as improved gross margin.”
Ericsson is providing equipment to two-thirds of all of the commercially launched networks. While initial 5G use will be consumer driven, Ekholm recognized that the long-term success of 5G depends on sales to enterprises. He projected annual sales growing organically by 7 percent, driven by networks in North America and Northeast Asia.
“It is also clear that the first use case for 5G will be enhanced mobile broadband,” he said “But the real potential over time will be enterprise driven use cases, where we the leverage the capabilities of 5G in terms of high speed, low latency, low batter consumption, multiple connections per service unit that will create all of those new use cases.
Ericsson continues to invest in its five-year portfolio, both in radio and in the cloud native core portfolio of digital services, as well as increasing its investments in R&D and managed services.
While it is still early in the process, Ericsson sees connectivity in the enterprise sector as becoming increasing important. Ekholm cited a recent sale to an automotive company in Germany as an example.
“So, the way we think about it is that we have a consumer business that’s the bread and butter, he said. “But on top of that, we are starting to see an enterprise segment emerging. But it’s still too early to talk about it as a big market. It’s just in its infancy.”
Networks will be built out initially to capture consumer business and then later to serve enterprises, Ekholm said, which will provide a long-term need for 5G technology.