Ericsson joins O-RAN alliance after completing MediaKind divestment

Ericsson has announced a couple of pieces of corporate housekeeping that could symbolise the end of one era and the start of a new one.

Right at the end of last week the company announced the divestment of 51% of its media solutions business, which is rebranded as MediaKind last summer for reasons best known to those concerned. It turns out you need more than a rebrand to turn a business around and this division remains a lowlight of Ericsson’s earnings, but at least it only needs to account for 49% of its rubbish numbers from now on and it reckons the next quarter will be half a billion Krona better off as a consequence.

As if to demonstrate how much it has already moved on Ericsson then announce it’s joining the O-RAN Alliance. This refers to open RAN which, as you can see from the video by Heavy Reading’s Gabriel Brown below, is all about pushing innovation in the RAN market. The O-RAN Alliance was unveiled at last year’s MWC so Ericsson has left it a year to join an organisation that it must surely view, at least partially, as a threat to its interests.

“Ericsson is a strong supporter of openness in the industry, and the benefits this has on global ecosystems and innovations,” said Erik Ekudden, Ericsson CTO. “Our ambition is to actively support and drive discussions and developments around future RAN architectures and open interfaces. The O-RAN Alliance is an important coalition that creates an arena for these discussions, complementing other standardization and open-source initiatives in the industry which we are already active in.”

Noble words from Ekudden, but the traditional business model for big kit vendors has favoured exactly the opposite. Using closed, proprietary technologies not only offers greater control over their development and implementation, but also creates the environment for vendor lock-in, where the operator is committed to that once vendor for maintenance, upgrades, etc. This restricted choice results in higher margins and is one of the reasons operators are so keen to open things up.

So while we’re happy to take Ekudden’s statement at face value, there seems to be a fair bit left unsaid. It looks like the O-RAN Alliance is here to stay, so it makes sense for Ericsson to be involved with it, even if only to get the inside track on the evolution of this threat to its margins. And if its participation occasionally hindered the process of opening up the RAN market, then maybe Ericsson would be OK with that too.

Here’s Brown’s take on the O-RAN alliance and you can read further analysis on Light Reading here.

 

We’re patient enough to make money from video – MediaKind

With major players scarpering away from video as quickly as possible, MediaKind is confident there is money to be made, you just have to be patient enough.

Nokia was the latest to put the venture into video behind it, while Cisco exited in recent months and Ericsson’s divestment in video creating the very subject of this story. With so many industry heavyweights fleeing the scene after investments were massacred, the claim there is money to be made might be something of a surprising one.

At IBC 2018 in Amsterdam, MediaKind executives were gracious enough to lay down their own markers. Firstly, the business is not reliant on the legacy technologies, its creating new services as we speak. And secondly, there is money to be made in video, you just have to be patient enough to realise it.

MediaKind was created through some swift Ericsson moonwalking. After making the decision to exit the video segment, Ericsson split its portfolio and managed to secure buyers for 51% of the assets which would eventually be named MediaKind. The rest of the Ericsson video business was rebranded to Red Bee Media, and is still proving to be a drain on the Ericsson profit margin.

With Ericsson trying to hide its horrible wander towards video, Nokia selling its smaller venture to Canadian private equity group Volaris and Cisco selling its Service Provider Video Software Solutions (SPVSS) business in May, it would be a safe bet to assume the money is not there to be made. However, according MediaKind CEO Angel Ruiz as long as you are patient, success is possible.

The issue right now is the market is overcrowded. There are too many suppliers fighting over a small number of customers, a similar position the telco industry found itself in in years gone. Consolidation is a trend which will almost certainly develop over the coming months and years, just as it did in the telco space, and those remaining on the other side will have a strong brand and a buoyant marketplace. Ericsson rode the wave of consolidation in the telco space, surviving to become one of the world’s most influential vendors today, and MediaKind will aim to replicate this journey in video.

Whether the same outcome can be realised remains to be seen. More established players in the market are making moves, though consumer videos trends suggest investment in technology will only increase. For the likes of Ericsson, Nokia and Cisco, this diversification strategy seems to be a step too far. These are companies which can realise profits from consumer video trends, but divestments suggest it will be done closer to core competencies; networking products and infrastructure.

The theory is sound, now all Ruiz and his cronies need to figure out is how to combat the offerings from new-boys on the market such as AWS.