By Sam Schechner
LAGUNA BEACH, Calif.--A few years ago, Swedish networking giant
Ericsson made a profitable bet on the growing but largely
low-margin smartphone business: getting out of it.
Now the nearly century-and-a-half-old company that makes
wireless phone networks and other gear and services for phone
companies wants to capitalize on the rise of cheap, low-margin
smartphones by building out mobile networks to serve billions of
people who will buy the new phones in the developing world in the
next five years.
"We sell exactly the same radio technology in New York as we do
in Nigeria," said Ericsson Chief Executive Hans Vestberg, speaking
Tuesday at the WSJD Live global technology conference. "That has
driven down the cost dramatically."
Ericsson is looking to wire the developing world in part because
growth in its main markets--including the U.S. and Japan--has
peaked. Meantime, investment in Europe in fourth-generation
networks known as 4G has lagged, and been less profitable because
of heavy competition from China's Huawei Technologies Co.
The new battleground is in emerging markets, where Huawei is
also aggressive. Companies like Facebook Inc. and Google Inc. are
also racing to wire those markets with ambitious projects involving
blimps and drones, offering potential competition for bringing
Internet service to the next billion people.
Ericsson controls a third of the global market for wireless
networks, but has seen that share fall from 39% in 2011, according
to market research firm Infonetics. In that same period, between
2011 and 2013, Huawei saw its market share of wireless network
equipment globally grow from 14% to 19%.
Mr. Vestberg said the Swedish networking giant is working on
technology to build out mobile networks that require fewer
locations and towers to ease the rollout of networks across Africa
and other parts of the world. "We're working a lot with solar
panels," he added.
For Mr. Vestberg said the real disruption of the Internet has
yet to come.
"We think we have seen the revolution? We haven't seen it yet,"
Mr. Vestberg said, calling the current pace of change slow.
"We're going to have the Facebooks of Nigeria. They will
innovate because they will be connected."
Write to Sam Schechner at sam.schechner@wsj.com
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