Ericsson's new strategy
One important forum for the discussions on IP was Ericsson’s strategic development project in 1995–1996. More than 500 experts and managers were involved, from within the company, from leading universities, research organizations and consultants, who participated in several seminars as part of the 2005 – Ericsson’s Route Into the Next Century project.
Ericsson’s annual report for 1996 describes the project as a “milestone”, the largest future study the company had undertaken. The market was facing radical change, and nothing could be taken for granted. The portfolio of marketable products was renewed within two to three years; staff had had to get used to a high rate of change; new jobs were being created all the time (for a long period at the rate of 1,000 new jobs a month), while others were phased out. Lifelong learning was a must for those who wanted to keep up.
Personal computers were seen as one factor that had revolutionized both working life and leisure. “Today the world’s computers want to be able to talk to each other, so communication via the internet is growing more rapidly than anything we have ever seen in the communications industry,” the annual report said. In the media world there was an increasing shift to electronic distribution. The markets for telecom and data communication were merging. Software accounted for an increasing share of Ericsson’s customer offerings.
“Ericsson believes that the majority of the world’s population wants access to speech, data, image and video communication (multimedia) at low cost,” were the words used. There were two areas of uncertainty: How far would deregulation of telecommunications go? And how successful was the internet going to be?
In other words there was awareness of the internet and IP technology at Ericsson. And where IP access was concerned, the new strategy said that efforts in this direction were to increase in every business division. The aim was to be good or best in many different technologies and standards, and from this point of view IP was only one of many technologies.
What forecasts were being made about the development of mobile telephony at the time? Gunnar Sandegren, who worked in business development at Ericsson, led a project in which this was one of the issues.
“I invited Telia, Europolitan and Comviq to take part and with the exception of Comviq they did. McKinsey provided consultants to inject ideas and a secretariat for six months and we described five scenarios based on five perspectives: users, operators, content providers, distribution channels and manufacturers. What would the telecom world look like in 2005?”
What is remarkable, says Sandegren, was that all five scenarios produced similar results. “All five scenarios ended up with the same number of mobile subscribers in 2005: about 2 billion.”
Author: Svenolof Karlsson & Anders Lugn
A detailed strategy carried out in 1995/96 was recorded in the 1996 report. The image above illustrates the supply chain for content and services, as it was understood, while the one to the right shows the traditional telecom supply chain.