Ericsson strategy Global trends for local markets
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1 Ericsson strategy Global trends for local markets Torbjörn Nilsson Senior Vice President, Strategy & Product Management
2 Key industry trends Economies of Scale & Scope Convergence Consolidations Operational Excellence Growth &Business Development Emerging Markets Triple Play Services Regulations Next Generation Networks Layering; Softswitch & IMS & IP Broadband; Wireline & Wireless Multimedia Devices & Services E2E Performances & Securities 2
3 Mobile & Broadband (Triple Play) & Emerging markets the Growth Opportunities ( ) New Mobile Subscriptions (>1,6 billion active subscriptions) New Mobile Voice Traffic (>7 Tera Minutes) New Broadband Subscribers (328 mil.) China 16% Rest of APAC 14% India NAM India NAM 10% 6% NAM 14% LAM 18% China 19% and 15% India 32% CEMA 32% WE 7% China 24% Rest of APAC 10% CEMA 15% LAM 7% WE 12% Rest of APAC 12% CEMA 7% WE 25% LAM 5% ~85% in emerging markets! Concentrated to US, China & India Concentrated in NA, WE & China Source: Ericsson Strategic Forecasts 2005 (Base Case) 3
4 Triple Play Home Mobile Office Telephony TV 4
5 Spendings on Broadband Services key to success $ VoIP, IP-TV, Corporate data, Premium content & performances Broadband,Internet Access Classical telephony including Narrowband Internet Now 5
6 High interest for VoIP and Triple Play % of operators considering most important new services in % 45% 40% 45% Worldwide (314 respondents) Europe (86 respondents) APAC (33 respondents) 35% 30% 25% 20% 24% 17% 32% 23% 27% 28% 19% 29% 15% 12% 10% 5% 3% 3% 0% Enhanced BB VoIP Triple Play Video (stand alone) Source: Heavy Reading
7 Broadband everywhere 7
8 Convenience and flat rate accelerate Mobile usage & New Opportunities Mobile broadband opens up for more advanced services; - Video / Music / TV - Download / Push content - Enterprise 2G 3G 3G+ Mobile Triple Play Data & voice traffic increases dramatically Charged by traffic Flat rate and bucket charging 8
9 Introduction of Mobile TV Recent announcements for planned or ongoing trials/launches Italy W. EUROPE USA Sweden Austria France TeliaSonera FT/Orange Bouygues T-Mobile Vodafone 3 La Tua TV TIM NRK AMERICAS Sprint TV Cingular - MobiTV Verizon Telefonica Movil Source: Public Sources, March 05 3MobileTV ASIA-PAC KDDI EZ Channel SK Telecom Korea Telecom 3 Optus 9
10 3G / WCDMA uptake Million WCDMA subscriptions Japan Italy 5 UK 0 7/2004 8/2004 9/ / / /2004 1/2005 2/2005 3/2005 4/2005 5/2005 6/2005 7/2005 Japan Italy UK Germany Australia Austria USA UAE Switzerland Sweden Spain South Africa Slovenia Singapore Portugal Poland Norway Netherlands Mauritius Luxembourg Latvia Korea Israel Ireland Hong Kong Guernsey Greece France Finland Denmark Bahrain Sources; EMC estimates 10
11 Next Generation Networks a transformation to new communication architecture and business models Today s Single-Play service networks Wireless Wireline Data/IP TV Starting Triple-Play service per network Cable TV Services Services Services IMS IMS IMS 3G xdsl/gbe WiFi/Max Cable Converged Multi-media services network Content Multi-Media Services Connectivity Application Multi-Media & Telephony Control (IMS with Mobility) Connectivity/ Packet Backbone Network Multi-Access Networks 11
12 Ericsson in Growth Opportunities Revenues & Value chains Increase usage Innovate & Stimulate markets Triple Play / New Services (IP/IMS/SoIP) More Bandwidth / Capacity / Coverage / Simplicity, etc. New Business Models (Managed Services, end-user services, convergence, mobile enterprise, etc.) Regulation (Spectrum / VoIP / IPR / DRM) Attract new users/things Current Markets & Products Increase Penetration Low total cost models (Expander/Softswitch) Several subscriptions (>100% penetration) Emerging Markets (well positioned) 3 billion Users/ Things 12
13 Lower Total cost of Ownership or more coverage with fewer sites Expander 30-50% reduction of number of sites reduces total cost with CAPEX: -30% and OPEX: -30% 13
14 Ericsson leading in Softswitch & IMS Solutions (21+ Mobile & 35+ Fixed deployments & 27 IMS agreements), (lower core Network OPEX up to 50% & New Multi-media Services) Classic Switch Solution Classic Switch (control and switching) Ericsson Softswitch Solution MGW Server (MSC, TeS, IMS) (Control) Mobile Media Gateway (Switching) Classic circuit-switched network Layered Architecture network Control Layer Connectivity Layer MGW TDM MGW IP MGW MGW MGW 14
15 Ericsson leads the evolution into Mobile Broadband 2003/4 2005/6 2007/8 2009/ /12 WCDMA 0,5 Mbps HSDPA Upto 14 Mbps HSUPA Upto 5 Mbps MBMS Multi-, broadcast Multimedia service Super 3G Up to 100 Mbps 15
16 Ericsson providing a new High Performance Broadband (IP) From Best Effort Single ATM Play No QoS/Concentration Modem DSLAM ATM switch BRAS CPE ADSL2+/ VDSL DSLAM Aggregation Switch CWDM Switched Ethernet Access Edge IP Backbone network Residential Gateway IP/Ethernet Access Ethernet aggregation Single/Dual Edge To Multi-Service IP Play QoS / High throughput 16
17 Ericsson s Applications & Networks & Terminals work end-to-end Content Applications APIs Connectivity Applications & Service Network IP Control (IMS) IP Back-bone Applications Platforms Protocols GPRS/EDGE/WCDMA hardware (several common ASICs) Ericsson Mobile Platforms Gateways Fixed and mobile access Ericsson Network Layers Sony Ericsson Content Ericsson secures end-to-end solution 17
18 The Ericsson Service strategy remains Global Services Access Expand the service scope Managed & Hosted Services Business and Technology Consulting Systems Integration Systems Transmission & Transport Provide services in Ericsson s end-to-end solutions Network Design Network Rollout Education Customer Support Enterprise 18
19 Strong R&D and strong IPR (Ericsson case) More than 16,000 granted and 15,000 pending patents High proportion essential patents Clear leadership in: GSM/GPRS/EDGE WCDMA IMS Very strong position in several other standards: CDMA WiMAX OFDM WLAN / WiFi etc. All companies in the industry need a patent license agreement with Ericsson 19
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