Ericsson CEO: We won't outsource our R&D

ASPEN, Colo.--Do not look for Ericsson (NASDAQ: ERIC) to follow its competitor Alcatel-Lucent (NYSE: ALU) and outsource any of its research and development. In an interview with FierceWireless, Ericsson CEO Hans Vestberg called the company's R&D efforts Ericsson's "heart and brain," and he said that he would never outsource the firm's core business.

ericsson Hans Vestberg


"We are leading in R&D. That's what helps us keep our position in the radio access network," Vestberg said.

Although Alcatel-Lucent has not publicly announced its outsourcing initiative, Telecom Paper, citing an article in France's Les Echo, reported that Alcatel-Lucent said it will outsource its research, development and maintenance activities related to 2G and 3G technologies to India-based HCL. Those activities include technical support services and associated design, development and testing operations.

Some analysts have said that Alcatel-Lucent's move may not be a big deal, as long as the outsourcing results in good products for the firm.

However, Ericsson's Vestberg has long been a champion of R&D. He said he prefers investing in R&D over purchasing companies because he thinks R&D is more profitable. "This is how we keep the best performance in our network equipment and the better throughput," Vestberg said.

Alcatel-Lucent's 2G and 3G outsourcing move is part of the company's Shift Plan, unveiled by CEO Michel Combes last year, which aims to help the vendor achieve profitable growth and much-needed liquidity.

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Hans Vestberg, President and CEO, Ericsson – Most Powerful Person in Wireless and Wireline