When he became the CEO of Ericsson in January 2017, Bao Yikang's burden was not heavy: Faced with changes in the market situation, this century-old store with a history of about 140 years ushered in a critical moment of strategic transformation. As the helm, Bao Yikang needs to lead Ericsson on a new direction and explore the right path for future development.
At that time, the new Internet economy was rising strongly, and operators had long lost their glory; although 4G business was in full swing, ARPU growth was weak, and trends such as 5G and the Internet of Things were surging, and the next round of growth opportunities was brewing. To this end, Bao Yikang implemented a business-focused strategy soon after taking office, focusing on network business, digital services and management services, with 5G being the top priority.
At the 2018 Mobile World Congress held in Shanghai recently, Bao Yikang said: "We have regained our share of the global market, especially the improved financial report in the first quarter of this year, confirming that we are indeed on the right path."
"When there is time, there is momentum, and when there is momentum, everything is done." As 5G has become the industry trend, Bao Yikang's primary strategic direction for Ericsson is 5G.
Bao Yikang has called on the industry to take active actions and embrace new opportunities in the 5G era. For example, at the MWC held in Spain in February of this year, Bao Yikang called: “For 5G, we are no longer satisfied with talking on paper, but we must act hard.†At the just-concluded 2018 World Mobile Congress, Ericsson said “5G opens the limit. "Business Opportunities" is the theme of the exhibition, which further calls on the industry to take action and embrace the unlimited commercial potential of the 5G era.
Ericsson will focus on 5G because, driven by market demand, 5G has become a general trend, and once 5G becomes a reality, exciting changes will occur in the industry.
According to the latest "Mobile Market Report" released by Ericsson, global data traffic is currently increasing rapidly, at a rate of approximately doubling every 18 months. Ericsson predicts that from 2018 to 2023, mobile data traffic will increase nearly 8 times, reaching 107EB/month by the end of 2023, which is equivalent to the traffic generated by every mobile user in the world watching 10 hours of full HD video.
Bao Yikang predicts that according to this development trend, by the end of 2019, many operators' networks will not be able to carry high-speed data growth. In order to cope with the explosive growth of traffic, operators can choose to expand 4G or directly deploy 5G. Among them, 5G can obtain new spectrum, and the spectrum efficiency is higher, and it has advantages in traffic cost control. Therefore, Bao Yikang believes that operators should act now to prepare for 5G deployment.
Currently, global operators are preparing for 5G on the one hand, and are also looking for reasons to deploy 5G on the other. After all, 5G involves large-scale investment, and operators must solve the issue of investment legitimacy. Based on the above-mentioned traffic growth trend, Bao Yikang believes that the first investment use case of 5G is to reduce data transmission costs and provide users with a good business experience in a cost-effective manner. Operators must also control the network cost of enhanced mobile broadband, which is more important than everything else.
In view of the explosive growth of mobile traffic, operators need to work hard and prepare for 5G from now on. As the 5G network matures, new applications such as massive Internet of Things, fixed wireless access, and mission-critical applications will also be applied one after another, opening up new revenue channels for operators.
Love to fight to win, Ericsson is in action5G is a huge business opportunity, but it is not easily available. Because the broad market prospects of 5G have attracted giants from all walks of life, there is no denying that the competitive situation that Ericsson is facing today is very fierce. In this regard, Bao Yikang said that in order to gain an ideal market share in a competitive market, Ericsson needs to ensure its leading position in technology, and needs to be able to provide customers with the best technical solutions to achieve the highest cost performance and best efficiency.
From the past 2G to 4G era, Ericsson has a leading position in the field of mobile communication technology standards. In the 5G research and development process, Ericsson also started early, deployed research and development, actively participated in the activities of various 5G standardization organizations, and achieved close cooperative relations with major global operators.
In addition, the 5G competition is, in the final analysis, a competition of technical strength. Bao Yikang said that Ericsson has continued to expand investment in recent years, with a 10% increase in R&D investment to ensure technology leadership, most of which is used for 5G. Although Bao Yikang did not specify the specific proportion of 5G patents, he affirmed that Ericsson’s contribution and patent share occupy a very strong position in the entire 5G standard formulation process.
While participating in the formulation of standards, Ericsson is also actively deploying products and applications. For example, in terms of products, Ericsson's wireless system has been able to carry 5G traffic through software upgrades since 2015, providing operators with a cost-effective way to upgrade 5G. In addition, Ericsson also has dynamic spectrum allocation technology. When the operator's hardware equipment is ready for 5G, it can configure the spectrum according to the actual situation.
At the same time, Ericsson is still exploring 5G applications. The VR cloud rendering, 5G intelligent manufacturing, and eye-tracking to achieve VR exhibited during the Shanghai Exhibition are the explorations of its use cases in the 5G industry. In the process of exploring the above applications, Ericsson has established partnerships with many industries.
Through various coordinated advancements, Ericsson has regained its glory in the 5G market. It is reported that, so far, Ericsson has signed 39 network testing cooperation memorandums of understanding with operators, and has conducted comprehensive cooperation in the 5G field with 22 industry partners, 45 universities and research institutions worldwide.
The Chinese market is the highlightLooking at the global market, Ericsson’s largest sources of income are the US market and the Asia-Pacific market dominated by China. These two regions are Ericsson’s strategic locations and the focus of the future 5G era.
To this end, Bao Yikang said that in the 5G era, Ericsson will continue to provide particularly powerful products and services, maintain technological leadership, establish and maintain the highest quality customer relationships, and lay the cornerstone of success in the Chinese and American markets.
Bao Yikang, China is a very important market for Ericsson. Ericsson has more than 5,000 R&D teams in China, and this number is still growing. Ericsson has invested heavily in creating the best products and investing in development roadmaps to maintain a leading edge in technological competition.
In terms of 5G, Ericsson has maintained close cooperation with the three major operators, and at the same time actively participated in the 5G test organized by the IMT-2020 (5G) Promotion Group and achieved good results.
Facing the future, Bao Yikang promised to come up with the best solutions and provide tailor-made help according to the needs of Chinese customers.
In the interview, Bao Yikang also mentioned the effectiveness of strategic adjustments. He said that Ericsson has implemented a low-cost and high-efficiency operation strategy and implemented a cost-saving plan, reducing the workforce by 20,000 people and improving operational efficiency. In the future, we will continue to implement the focus strategy, including further increasing R&D investment, and further reducing the cost of service provision departments and administrative costs.
In addition, in addition to the network department, Ericsson’s telecom management services have turned losses into profits, obtained profits, and provided services in a cost-effective manner; the digital service business has gone through a relatively difficult period, and Ericsson is also taking action. It is expected this year Results of the second half of the year.
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