Ericsson Focusing More on IT Services

Ericsson is focusing more on IT services, even as it moves into increased competition with companies such as IBM, Nokia Oyj, Alcatel-Lucent and Accenture (News - Alert) Plc, news reports say.

It was reported by Bloomberg Businessweek that Ericsson (News - Alert) wants to compete more in efforts to combine communications systems for its clients. Ericsson wants to be involved in phone networks, computer systems, consulting and software, the report said.

That will mean it will be in “direct competition” with the bigger computer-service providers, Janardan Menon, an analyst with Liberum Capital, told Bloomberg (News - Alert) Businessweek.

“For us to stay competitive, we’re transforming our services business to be reliable and flexible,” Hans Vestberg, Ericsson CEO, recently told reporters. “I’m confident -- our model is hard to replicate in a short time.”

Vestberg was in Barcelona, Spain, to find new clients and customers at the Mobile World Congress. He was among rivals there, too. Rajeev Suri, who leads Nokia’s networks; Ginni Rometty, IBM (News - Alert) CEO; and Michel Combes, Alcatel-Lucent CEO were there, as well. In total, the services market for phone carriers totals $300 billion a year. “It’s a crowded market,” Menon added.

Still, the telecom-services market will increase by up to 7 percent a year over the next three years, Ericsson predicts. In 2012, it was valued at about $273 billion.

IBM meanwhile had no comment on Ericsson’s push into services, Bloomberg Businessweek reports. Last quarter, Ericsson saw services revenue total $4.2 billion, a 3 percent loss. IBM’s recent services revenue was $14.7 billion.

While in Barcelona for the trade show, Vestberg highlighted the company's focuses on innovation, network evolution, OSS/BSS and process transformation, and revenue growth, according to a company statement. Ericsson also noted that half of all LTE (News - Alert) smartphone traffic goes through Ericsson networks. It was rated tops for LTE market share in the world's top 100 cities. The company's position in Services was “extended with a new launch of Telecom Cloud Transformation, which provides consulting and systems integration for operators,” the statement said. Some 43 percent of Ericsson's sales come from Services, the statement adds.

“Ericsson is showing world-leading technology and service capabilities and innovations,” the company continued in the statement. “We believe that anything that benefits from a connection will be connected, and we lead the way with solutions that drive the development in mobility, broadband and the cloud, creating the foundation for eco-systems and transformation across industries.”