Information on the Company
Company history, development and strategy
Introduction
Our origins date back to 1876 when Lars Magnus Ericsson opened a small workshop in Stockholm to repair telegraph instruments. That same year in the United States, Alexander Graham Bell filed a patent application for the telephone. Lars Magnus Ericsson soon recognized the great potential of voice-based telecommunications and realized that the technology could be improved. He started to develop and sell his own telephone equipment and within a few years reached an agreement to supply telephones and switchboards to Sweden’s first telecom operator. Stockholm soon had the highest telephone density in the world.
Today, Ericsson is a leading provider of communications equipment and related professional services and multimedia solutions to operators of mobile and fixed networks worldwide. Over 1,000 networks in more than 175 countries utilize our equipment and we are one of the few companies worldwide that support end-to-end solutions for all the main global standards of the GSM/WCDMA track.
We invest heavily in R&D and actively promote standardization and open systems. As a result, we have a long history of innovation and pioneering of future technologies for more efficient and higher quality telecommunications.
Also reflecting our ongoing commitment to technology leadership, we have one of the industry’s most comprehensive intellectual property portfolios containing approximately 24,000 patents.
Technical milestones
1878 Telegraph to telephone
1923 Manual switching to automatic switching
1956 First mobile phone system
1968 Electro-mechanical to computer control
1978 Analog switching to digital switching
1981 Fixed communications to mobile communications
1991 1G analog to 2G digital mobile technology
1998 Integration of voice and data in mobile networks
1999 Narrowband circuit to broadband packet switching
1999 Fixed telephony softswitch
2001 2G narrowband to 3G wideband mobile technology
2003 Mobile softswitch
2004 Launch of WCDMA (3G) networks in Western Europe
2005 Launch of HSDPA mobile broadband networks in North America
2006 Launches of HSPA mobile broadband networks globally
2007 Fiber access, VDSL and IPTV in broadband networks
2008 Multi-standard radio base stations and LTE technology
Vision, goal and strategy
Ericsson’s vision is to be the prime driver in an all-communicating world – a world in which any person can use voice, text, images and video to share ideas and information whenever and wherever he/she wants.
Our business goal is to create value for our stakeholders and generate growth, profit and cash flow that are sustainable over the longer term. We measure performance in three fundamental metrics: customer satisfaction, employee satisfaction and financial returns for our owners. We believe that highly satisfied customers, empowered employees and an enduring capability for value creation for our shareholders help to assure a competitive advantage.
We strive to be the preferred business partner to our customers and we are a major supplier to most of the world’s leading mobile operators and many of the world’s leading wireline operators. We believe that our ability to offer superior end-to-end solutions – network infrastructure, professional services, multimedia solutions and core handset technology – together with our in-depth knowledge of consumer requirements, make us well positioned to assist operators with their network development and operations.
We are a market leader in GSM and WCDMA/HSPA network equipment and related rollout services, systems integration and managed services. We are growing in the area of wireline broadband networks, in metro Ethernet solutions and in optical transport, and we are a provider of multimedia solutions for both wireless and wireline operators.
Our strategy to realize our vision and business goal is to:
to make people’s lives easier and richer, provide affordable communication for all and enable new ways to do business.
Successful execution of the strategy is built on (1) addressing customer needs; (2) innovation for technology leadership and (3) operational excellence in all we do.
Addressing customer needs
The foundation for our business is the strong and long-term relationships we have with our customers, and we work closely to understand their business and technology needs. Needs naturally vary among the customer base, however, with some apparent general needs:
With our significant scale advantage, tailored end-to-end solutions and local presence we are able serve as a true partner – providing fast time to market (TTM) and competitive total cost of ownership (TCO) – and help our customers to fulfill their business objectives.
Innovation for technology leadership
Innovation is an important element of our corporate culture and is key to our competitiveness and future success. We have a long tradition of developing innovative communication technologies, including technologies that form the base for industry standards. By early involvement in creating new standards and technologies we are often first to market with new solutions – a distinct competitive advantage.
Within our ambitious R&D program, we have approximately 19,800 (19,300) employees in 17 (17) countries worldwide and we invested SEK 31 billion (excluding SEK 3 billion restructuring charges) or 15 percent of sales on research and development during 2008. The vast majority is invested in product development, of which the majority in mobile communications network infrastructure. We have continued to invest in strategically important areas of broadband access, mobile systems like LTE, converged networks, service layer, IP technology and multimedia. Our ability to generate world-class innovations is enhanced through cooperation with a variety of partners including customers, universities and research institutes.
Intellectual property rights (IPR) and licensing
Through many years of involvement in the development of new technologies, we have built up a considerable portfolio of intellectual property rights (IPR) relating to telecommunications technologies. As of December 31, 2008, we held approximately 24,000 (23,000) patents worldwide, including patents essential to the standards GSM, GPRS, EDGE, WCDMA, HSPA, MBMS, TD-SCDMA, cdma2000, WiMAX and next-generation LTE. We also hold essential patents for many other areas, e.g IMS, Voice-over-IP, ATM, Messaging, WAP, Bluetooth, SDH/SONET, WDM and Carrier Ethernet.
Our intellectual property rights are valuable business assets. We license these rights to many other companies including infrastructure equipment suppliers, embedded module suppliers, handset suppliers and mobile application developers, in return for royalty payments and/or access to additional intellectual property rights. In addition, we acquire rights via licenses to utilize intellectual property rights of third parties. We believe that we have access to all related patents that are material to our business in part or in whole.
For more information please see Risk Factors, “Strategic and Operational Risks” and Board of Directors’ Report, “Research and Development”.
Operational excellence in all we do
We are convinced that operational excellence is a competitive advantage. Therefore we are continuously focusing on how to improve our internal processes, support systems and ways of working. Our mission to take our customers forward in the best possible way requires well developed change capabilities, efficient and effective processes that consistently yield innovative, high-quality products and services with low cost of ownership.
No matter how far we have come, we will always continue to drive operational excellence across the company. By continuously learning from our experiences and the needs of our customers we will become an even better company.
