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.