- Ericsson’s emerging enterprise business is growing at 20-30% per year, with momentum expected to accelerate and reach 20% of total company revenues by 2027.
- With Cradlepoint and Vonage, Ericsson is in a leading position to bring 5G innovation to life, combining high-performance networks for CSPs, pre-packaged solutions for enterprises and communication network APIs for developers.
5G is a true platform for digitalizing society. It is the first generation of wireless technology that offers much broader applications than pure consumer use, creating significant additional value. For example, accelerated digitalization is ushering in a profound revolution in human health; driving precision agriculture to feed a growing population in a sustainable way; accelerating the transition to sustainable energy; driving clean, safe, and efficient transport and logistics; and enabling fully agile factories.
And because of its wider range, higher reliability, and lower latency, 5G is the common thread underpinning the success of new and exciting enterprise use cases and solutions – including Web 3.0, the blockchain, NFTs, AI, digital twins, XR devices and more.
Without seamless, reliable, and secure connectivity, none of these breakthroughs will or can become reality. This is why at Ericsson we are so focused on the enterprise segment, why we are excited about its future and why we are investing to turn this vision of the better-connected enterprise into reality.
Enterprise is where we see the opportunity to grow long term, and the opportunity for a value-creating transformational shift for our industry. Our emerging enterprise business is already growing at 20-30 percent per year, and we expect this growth momentum to accelerate, reaching 20 percent of company revenues by 2027.
In this context, we’re executing a focused expansion into enterprise on two fronts.
Enabling better business outcomes
The first front, Enterprise Wireless Solutions, is addressing the multibillion-dollar opportunity of secure enterprise connectivity. Here we are delivering networks and solutions designed directly for enterprise customers, in what most people would think of as ‘traditional’ organizations across both the public and private sectors.
Doing this represents a resounding response to the stated needs of these customers, given that enterprises across verticals need to consistently improve their operations, drive innovation in an agile and sustainable way and enhance interactions with customers and employees. Indeed, 5G is fast changing from ‘backup’ connectivity to the network of choice for businesses given the performance, security, flexibility, resilience, and scalability it brings.
Through our recent Cradlepoint acquisition, where wireless wide area networks (WAN) replace current fixed solutions for enterprise networking, companies can now connect sites, vehicles, mobile workforces, and IoT devices simply and securely using cellular technology. As a result of these myriad benefits, the cellular wireless WAN market is growing 26 percent YoY, which will only continue as 5G rollout continues.
Private networks are also gaining momentum with new products and strengthened go-to-market. By deploying their own private networks, for example, enterprises across sectors get access to guaranteed high-performing indoor and outdoor 5G cellular coverage, making it suitable for a range of uses - particularly in environments such as factories, education campuses and other large sites where security and ultra-low latency connectivity are critical.
By drawing on its powerful capabilities around throughput, mobility, reliability, latency, and data volume, 5G is on the path to enabling an eruption of potential uses in sectors as broad as manufacturing, transport and logistics, construction and engineering, mining, agriculture, retail, events and public spaces, healthcare, smart cities, and more.
This will not only benefit a whole swath of companies and provide Ericsson with a growing recurring revenue base, it will also drive business for our CSP customers and the wider ecosystem.
Driving industry evolution through high-performance network platforms
The second enterprise ‘front’ is the driving vision that led to our acquisition of Vonage and will benefit many parties in the value chain, from CSPs to hyperscalers, to software providers, to app developers, and more. Our objective is to shape the industry landscape and move from being a networking company, leading the development of wireless technologies, to becoming a platform company – leveraging 5G as the most powerful innovation platform ever seen.
In 5G, performance is a premium that consumers and enterprises are willing to pay for. And with advanced features such as speed, time-bound latency, network slicing and authentication, new differentiated performance services can be created which require a new monetization model.
This is where network APIs and the Global Network platform come into play. Network APIs put the capabilities of the network at the fingertips of the global developer community, who in turn will create new innovative use cases. For example, authentication without passwords or low-latency performance for superior extended reality experiences.
These new use cases – which are based on differentiated performance, will offer CSPs additional revenue streams on top of their current subscription revenues.
To develop these sorts of new network APIs, a deep network understanding is required. That is the core of Ericsson. In addition, though, a developer community is also needed, and that’s where Vonage’s 1.2 million app developers come in. Vonage is the missing piece of the puzzle that turns 5G into an innovative network platform that any application can be built on.
As a result, we are establishing ourselves as a platform company that can give app developers access to unique levels of reliability, security, latency and more.
The benefits will be extensive, as we are enabling a fundamentally new way to monetize connectivity, as well as bringing together solutions to capture additional value from the 5G ecosystem. For example, through the network platform, we will enable CSPs to deploy new pricing plans, moving from the traditional approaches based on minutes, data use and subscriptions, to models with premium and segmented experiences which are consumed dynamically as they are needed through APIs.
It also means that we will open up the network for third-party developers to quickly and efficiently deliver new and innovative communications-enabled consumer and business applications. And it means Ericsson will be able to partner with hyperscalers, software providers and enterprise networking companies to make network capabilities universally available for further innovation.
What makes Ericsson uniquely positioned to deliver on this transformational opportunity is that the sorts of applications we’re talking about – and especially future ones like VR glasses – require telco-grade reliability. While users can tolerate lower latency when receiving an SMS, for example, buffering or slow connectivity would not be an option in mission critical services, a live operation or mid-battle in a competitive online game.
It's important to remember too, that as we build towards this network platform vision, the Vonage acquisition is already today delivering extensive benefits to companies, especially SMEs, through its Unified Communications as a Service and Contact Center as a Service applications. This in turn is driving revenue and opportunity for the wider ecosystem, our own business included.
An ecosystem virtuous circle
One of the most important benefits of our enterprise strategy is that it has a very strong virtuous circle effect for the whole 5G ecosystem.
Through Enterprise Wireless Solutions, our future network platform vision and our existing Vonage customers, all this new ‘activity’ will drive ever increasing amounts of traffic back onto the broader 5G network, in addition to delivering new and innovative monetization models that drive long-term investments in the network. This will in turn create revenue for our Cloud Software and Services businesses, as well as myriad revenue-generating opportunities for our CSP customers, hyperscalers and any application developers building on the network. For example, we believe that in the near future, CSPs will derive significant revenue from differentiated experiences consumed through APIs. Already today, APIs for video and SMS are growing at 30 percent per year.
In short, with our enterprise strategy and our investments in Vonage and Cradlepoint, we are positioned to capture even more value across the 5G ecosystem. We are now in a leading position to bring the 5G innovation platform to life by combining high performance networks for CSPs, pre-packaged solutions for enterprises and communication network APIs for developers – in order to create a fundamentally new market. We couldn’t be more excited for what lies ahead in the enterprise space.
Related reading
Learn more about Ericsson’s commitment to digitalizing enterprise.
Explore how Cradlepoint’s Wireless WAN Edge is transforming enterprise operations.
Learn more about Vonage and Communications APIs.