Three mobile paths

Håkan Eriksson had declared in 2005 that lead times for development work would be halved by 2008. The company achieved this goal by the beginning of 2008 – and then followed up by increasing R&D investment by SEK 2 billion.

Eriksson stated in an interview that it was important to maintain the company’s lead in all three mobile technologies – GSM, HSPA and LTE – at the same time, and that efforts also had to be devoted to getting the most out of the company’s acquisitions. “It costs money to stay ahead all the time, but this has been paying off for 132 years now,” was one of his comments. Another was: “You have to be bold enough to embrace what is new, like LTE, even if this may cannibalize technologies that already work. Other¬wise the competitors take over.”

Asked what LTE would be used for, Eriksson’s response was: “I do not know. We know nothing about what services will be offered, but we can be sure that they will come. All earlier technological progress has also been questioned.” He admitted that it was not possible to charge the “full price” for the new technology but explained that “when you have volumes, the margins come as well” and that the shorter lead times offered Ericsson “greater flexibility”.

For many people, Ericsson’s continued allocation of much of its research investment into GSM during 2008 was a mystery. Why go on developing an old technology? Eriksson says: “Because it is big; 3 billion people are using it and it is growing, not least because China is late with 3G. It is still possible to make advances that will reduce costs for customers, such as through more energy-efficient base stations.”

On the other hand, Ericsson now decided, in the summer of 2008, hardly more than a year after their launch, to terminate work on femtocells for broadband traffic. 

As Marie Westrin explains: “We got very enthusiastic comments when we presented the femtocells. But when it came down to it, what did you gain from them? In practice you needed fiber access to the fixed network for broadband applications. And if you have a fiber link and Wi-Fi at home, what do you need a femto for?

“It remains to be seen how things will go in the future. Maybe we haven’t heard the last word on femtocells.”

Author: Svenolof Karlsson & Anders Lugn

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