Ericsson focuses on IoT as it scales back enterprise ambitions

Ericsson
Ericsson is working with service providers to develop IoT offerings for other companies.

Ericsson reportedly dropped its effort to expand its client base beyond the telecom industry, but it continues to work with service providers to develop offerings for companies looking to tap the burgeoning internet of things market.

Reuters reported overnight that the venerable gear vendor had “ditched” the plan it unveiled three years ago to diversify its client base to include media, utilities and transportation companies. The strategy failed to gain traction, according to the report, and the Swedish company opted to refocus on its core business of selling to telecommunications companies.

“We will focus on telco clients and networks exclusively for now,” said Ulf Ewaldsson, Ericsson’s new head of digital services, in the Reuters story.

That move appears to be in line with the restructuring plan the company unveiled a few months ago, however. Ericsson said in March that it would book between $1.8 billion and $2.4 billion in write-downs stemming from its restructuring, and it unveiled a turnaround plan aimed at streamlining its operations by combining products and services.

“As stated at the time, restoring profitability is key and we will start by focusing the portfolio to fewer areas and securing effectiveness and efficiency in operations,” an Ericsson representative told FierceWireless this morning via email. “We will reallocate resources and increase investments in the following core portfolio areas: networks, digital services (OSS/BSS and telecom core) and internet of things (IoT).”

As Light Reading noted, Ericsson isn’t completely abandoning its enterprise-focused strategy: The vendor is ramping up its pursuit of the IoT through a new, dedicated organization it unveiled a few months ago, and will work with carriers to target potential customers looking to bring connectivity to a range of devices.

“We will build our IoT business with service providers, addressing industries based on use cases,” the representative told FierceWireless. “We will continue to address clients outside of the telecom industry through our service provider customers.”

Ericsson posted a loss of roughly $1.4 billion in the first quarter, suffering a 16% year-over-year drop in sales. It saw a loss of $181 million in the fourth quarter of 2016 as it continued to struggle with slowing 4G buildouts and increased competition worldwide from rivals including China’s Huawei and Finland’s Nokia.