Swedish vendor Ericsson has reorganized its networks division, splitting it into two new business units; Radio and Cloud & IP. The Cloud & IP unit will drive Ericsson’s work on virtualization, an area in which the firm has ground to make up on its competitors. Executive VP Johan Wibergh will continue to lead the Networks segment, although Ericsson has yet to name the heads of the two new business units.
Of these, Cloud & IP will be the more interesting appointment. Ericsson has long led the market in radio infrastructure and this unit will need a leader able to maintain and protect that leadership as technology continues to evolve towards 5G. In virtualization, however, Ericsson has been slower than the likes of Alcatel-Lucent and Huawei to stake its claim ahead of the intensification of competition that will accompany the industry’s shift to NFV.
Network Functions Virtualization is set to become strategically fundamental for Ericsson’s core telco customer base and the reorganization reflects the work that needs to be done, CEO Hans Vestberg said in a statement.
“The business logic and Ericsson’s relative position is different in the two areas. Radio is the foundation of Ericsson’s technology leadership and we are the undisputed market leader, same size as number two and three together. We are committed to maintain our leadership as the market evolves with 5G. 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.”
The formal restructuring will be complete by July, Ericsson said, with a spokesperson adding that appointments for the leadership of the two new units should be made in May.