LM Ericsson Telephone Company (ERIC) and Akamai Technologies Inc. (AKAM) have entered into an agreement to jointly provide solutions to tremendous growth in mobile data transfers, devices and cloud based functions. The solutions will ensure the quality of the matter transferred through the mobile networks and of the applications used.
In the venture, Akamai’s global delivery network will be combined with mobile networks for the first time, forming an integrated mobile Internet ecosystem intended to allow mobile network operators focus on the Internet value chain. This will speed up Akamai’s already accelerated content and applications over internet in mobile broadband as well.
Ericsson expects to see about 5 billion mobile broadband subscription by 2016. There is a rising demand among the people for better access to Internet content and applications on mobile devices. The combination of Ericsson expertise in mobile broadband networks and Akamai’s in daily Web interactions will benefit the whole of mobile and content industries.
As a technology and market leader in wireless equipment (based on the GSM standard), Ericsson stands to benefit from the continued growth of the wireless industry, especially in the emerging markets. GSM-based network expansions in the emerging markets (including Latin America, Eastern Europe, Africa, China and India) are expected to drive moderate revenue growth over the next several years. Having established partnerships with local companies and having set up R&D centers in numerous locations, Ericsson remains well positioned to win additional network expansion contracts in Asia over the next couple of years.
We expect the continued consolidation in the telecom industry to hamper growth and squeeze margins over the long term, as competitors that cannot compete on technology will begin to cut prices to win business. Going forward, “catch-up” capital spending by wireless carriers is likely to be replaced by lower-margin 3G equipment rollouts and network builds in price-sensitive emerging markets. In this environment, ERIC finds it prudent to plan for a flattish development in the global mobile infrastructure market and good growth in the professional services market. A major competitor of Ericsson is Alcatel-Lucent (ALU).
Headquartered in Stockholm, Sweden, LM Ericsson Telephone Company is a multinational company, engaged in manufacturing and selling wireless infrastructure equipment for the telecom sector. The company is a total network solutions provider, serving wireless and wireline operators, enterprises, and consumers.
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