Ericsson tips its hat to virtualization, splits networks division

Highlighting the growing need for traditional telecom infrastructure providers to develop technology solutions involving virtualization, Ericsson (NASDAQ: ERIC) has split its former networks division in two, creating one unit targeting just radio and another solely focused on cloud and IP.

ericsson CEO Hans Vestberg

Vestberg

While Ericsson remains a leader in radio-based technologies, it needs to reposition to meet the competition when it comes to virtualization, including software-defined networking (SDN) and network functions virtualization (NFV).

"In the cloud and IP space, which are vital for the evolution to 5G, we have made significant progress but are still a challenger. In a transforming market we will now intensify our work to capture opportunities in virtualization and cloud, building on our leading position in core networks," said Hans Vestberg, president and CEO.

Ericsson noted that splitting its networks division should help the vendor bring a clearer focus to the needs of each business area while maintaining an end-to-end view of the full networks operations.

The company also created a new networks segment, an umbrella organization that will comprise the two new business units and ensure they have synergies in R&D and an alignment of product portfolios as well as marketing. Johan Wibergh, who headed the former networks business unit, will be chief of the networks segment. He will remain a member of Ericsson's executive leadership team.

"A top priority for me initially is to ensure that we keep momentum in current business while we make the transition," Wibergh said.

The two new organizations will become effective on July 1, 2014, though the complete transformation will not be finalized until 2014's third quarter.

Ericsson is also undergoing other changes. It recently announced that Doug Gilstrap, the vendor's global head of strategy and one of Vestberg's top lieutenants, will resign from his role as of Aug. 1, ending a five-year stint at the company.

For more:
- see this Ericsson release

Related articles:
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Ericsson's Vestberg: 5G networks will be defined by how they are used
Ericsson's strategy chief and M&A guru Doug Gilstrap to leave company
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