Hans Vestberg has a penchant for explaining things. In another life, he might have been a teacher. “I love to draw,” he says as he jumps up to highlight his strategic vision, his marker racing across the white board. Who is this 46-year-old leading a global multi-billion dollar telecom company? As he says, he has never worked anywhere else. He was born in Hudiksvall, in northern Sweden in June, 1965. He graduated from the University of Uppsala in 1991 with a business degree and then went to work at Ericsson Cables in his hometown.
Since then he has held senior positions at the firm’s operations in Sweden, Brazil, Chile, China, Mexico and the U.S. He has also served as head of Ericsson’s Global Services unit where he was instrumental in developing the company’s services operation, which grew threefold during his five years there. Services today represent 39 percent of Ericsson’s total sales. He also served as chief financial officer for Ericsson from 2007 to 2009, and on January 1, 2010, was named CEO. He has been an officer since January 2004.
The company was founded by L.M. Ericsson in 1876 to repair telegraph equipment. Today it is a leader in 2G, 3G and 4G mobile technologies, provides support for networks with more than two billion subscribers, and has the leading position in managed global services.
You may not know it but Ericsson’s technology is the foundation for much of the hardware that makes cell phone networks actually work. Ericsson, which helped develop the global system for mobile communications (GSM), also holds the industry’s largest portfolio of wireless communication patents. The intellectual property covers nearly everything in the telecom industry and includes some 27,000 patents including the world’s largest collection of Wi-Fi patents. Ericsson is a net receiver of royalties and has some 90 license deals with handset companies and infrastructure providers. The company is in an enviable position. “If you want to be a part of this industry you have to cross-license with Ericsson. If not, it’s quite hard to make a phone or make infrastructure for mobility,” says Vestberg.
Ericsson is also an LTE leader in the U.S. market. The company’s LTE gear has been selected by U.S. carriers like AT&T, Verizon Wireless and MetroPCS. Plus Ericsson is playing a key role in Sprint Nextel’s Network Vision project. The company recently demonstrated LTE-Advanced with speeds more than 10 times faster than the existing LTE network in Sweden.
The company, which sold its first telephone in 1878, agreed in November to divest its stake in its handset venture Sony Ericsson Mobile Communications AB to partner Sony for $1.47 billion. The sale will allow Ericsson to focus on selling infrastructure gear as well as services.
By 2020, the company predicts there will be 50 billion devices connected to the Web because mobile broadband and inexpensive chips will spur the growth of a multitude of connected devices including televisions, cameras and game consoles. In this new “Internet of things,” billions of consumers and machines will constantly talk to each other via wireless networks.
Vestberg also is the visionary behind the networked society concept, where everything that benefits from being connected will be connected. To succeed, the networked society model must bring together mobility, broadband, and cloud computing — networks must become smart, scalable and provide excellent performance. The idea is to address global challenges including climate change, sustainability, education and health care.
A lifelong athlete, Vestberg is also the chairman of the Swedish Handball Association. He will deliver a keynote address at the 2012 International CES to detail his vision for a networked society at 1:00 p.m. on Wednesday, January 11, 2012, in The Venetian. For an overview of his vision of the mobile future, read on.
Headquarters: Stockholm, Sweden
Sector: Technology/Communication Equipment
Revenue: $28.2 billion (USD: 2010)
Operations: 180 countries
What is your vision of the mobile broadband future?
We have 5.8 billion mobile subscriptions and 85 percent of the earth’s population has mobile phones. That is where we are today. If we look five years from now we will have seven to eight billion mobile subscriptions. Notice I said subscriptions, not subscribers, because people have more than one of these machines. More important, 92 percent of the population will have mobile coverage. And even more important, there will be five billion mobile subscribers.
What will happen is that a tremendous number of people will have Internet — 3,000 times as many people will have Internet five years from now. How sure are we? Pretty sure, because we see the technology, the standardization and the scale of economy coming out. So that means if a GSM handset costs $200 today, with the scale of 3G, it will cost $50. Mobility was basically voice service. Five years from now it will be data and data uses on the network. We are already seeing it now. We are going to see some totally different usage compared to the world that was once voice service.
What is the networked society?
Basically anything that benefits from being connected will be connected in the future and will have an impact on people, enterprises and society. If you are a smartphone user today, you spend 25 percent of your time on the cell phone calling and 75 percent of the time you are doing something different. We use that phone in our lives to be more proactive. At the least we know we are going to use it in a totally different way because we are going to have a lot of local information on that connected device. It might be a phone, a pad or something that we didn’t know three years ago. The most important thing is that the infrastructure is there to transform people’s lives by using consumer electronics.
We believe that in 2020 we are going to have 50 billion connected devices. That is everything from machine-to-machine connectivity, to machine-to-person and person-to-machine, live surveillance connectivity that sends information when it needs it — there will be enormous changes in enterprises. Enterprises can improve dramatically their way of working.
When you have 93 percent of the earth’s population covered, you can basically take a very simple chipset and put it in anywhere.
What are some of the applications?
In the future school children will have information that is more accurate than what is in a printed book, and healthcare is going to be transformed. In Africa you have one doctor for 10,000 inhabitants — that’s an impossible situation but you can have one healthcare worker with one mobile phone sending the most vital information back to the doctor. You could not even imagine it five years ago because we thought [with our products] we were doing something for voice. When we talk to the consumer electronics world, we want to show the fundamental infrastructure that it rests on. With mobility, broadband and the cloud you can transform anything.
Do you see this helping the economy?
I am preaching this wherever I am. It’s proven that for every 10 percent of mobile broadband penetration, you have a one percent sustained level of GDP. For every 1,000 rural broadband connections, you get 18 net jobs, and for every doubling of speed of mobile, you get 0.3 percent of GDP growth. We do a lot of research because we want to talk about this great work that has an impact. But that impact will only come if you also do applications in consumer electronics. We believe this is the fifth technology revolution.
Are there security issues with the networked society?
With all benefits, come risk, but the benefits are way bigger than the risks. Of course security can be an issue — suddenly when everything is connected, you will have that type of risk. There will be people who misuse it, but the most important thing is that we need to understand the benefits and we need to work with the issues that come with it.
Will the intelligence be in the cloud?
There will be private clouds, enterprise clouds and public clouds — depending on what type of services they offer. We are a company in 180 countries, but we will not go on the public cloud. We will have our own private cloud and it will be more efficient. There will be different ways of using the mobility for broadband all around the world. First there is a huge uptake on smartphones that the consumer owns. When we look out, how many smartphones are there in the world of the 5.8 mobile subscriptions? Seven percent are high-traffic smartphones that use 10 times more data on the network. It could be an iPhone, Android or Windows-based device, but they are using the networks in a totally different way.
“When you have 93 percent of the earth''''''''''''''''s population covered, you can basically take a very simple chipset and put it in anywhere.”
But we need to understand that this is how we view the world — as customers or countries or subscribers or enterprises. For $50, you can use the network as much as you want, you can download and use a smartphone wherever. When I look at this world, it tends to get all of the benefits of a connected society. For $50, say in Indonesia, you have 80 percent of the population that will not have an Internet connection because they can not afford it. One U.S. dollar earned can pay for Facebook only. That is what most people around the world want — to stay connected with their friends through Facebook. This is what they have defined as one of the things that they need.
At the same time, coming soon in Europe and the U.S. as well is 4G, and you see public services like firefighters actually having a video camera on their helmets coming to a fire and broadcasting live information to the fire department. They probably could pay $1,000 a minute for this service because they are going to save a lot of lives. You have a different price here but for a much smaller market. And then you can start doing this with all of these markets and that is what we have done for voice, based on different groups and how they are going to use it. This is what I see that needs to happen to give all the right services. And this ends up giving you your own personal data service that you define how you want it—I want this, this and this.
How do you make this happen?
I always work 20 years out and then I work backward and I look at both the figures that we need to be number one in the industry. We do the network. We do the technologies so that they can detect what type of device the firefighter has or that this is the Facebook user as you are building the network. We start from here and then work backwards in order to meet the model here.
You can then take video which is probably an eighth or a tenth of the traffic. But now you are streaming from the firefighter — it could be peer-to-peer, it could be video conferencing, it could be live pictures that are, of course, going to be the heavy stuff. But then you have all of these different services — what will they be? I don’t know, but I promise you that they are going to invent them together with the consumer electronics application writers because they are going to have a fantastic foundation for doing that. It’s not about us doing it; it is consumer driven. We made the data option work before, but that is not the case anymore. We are laying down the foundation, and applications and consumer electronics are changing that world.
Do you see apps driving this too?
What we have seen so far is applications where people are checking the weather, fantastic sites, etc. Maybe the second phase is going to be to transform enterprises. And the third phase is going to be to transform our society. There are multiple solutions for CO2 emissions, finance and healthcare and the second phase is to develop cloud services for mobility for enterprises. I think you are going to have an evolution; a lot of apps have been developed for people, for our personal efficiency. In the future I believe it’s going to be even more about how enterprises can be more productive based on the same fundamentals.
What was the strategy behind Sony buying out Ericsson?
We are not the greatest at designing phones. So when that product evolved from the feature phone that is an extension of the network to be a smartphone, it was a good time for us to leave and a very good time for Sony to take the responsibility because they have content, they have TVs, they have film, movies and music. It will be a very important key proposition [for them]. Even though we have done phones since we started in fixed phones, peer-based phones, enterprise phones and then mobile phones, now we are leaving. From a heart or emotional level, it doesn’t really feel good, but from a rational strategic point of view, it was absolutely right.
Ericsson is device agnostic, right?
Yes, we work with anyone. We are at 850 million subscribers in the networks that we are rounding and operate in that industry. We are number one in that industry. And we do what we call OSS — everything that makes it possible — billing systems, control systems, operating systems for operators and in this Ericsson is close to number one. Ericsson also is doing the chips that are inside most every connected device.
If you buy a Finnish phone, Korean phone, Swedish/Japanese phone, some American phones — it will be Ericsson inside. Like Intel Inside. You can even buy a pad, you can buy a laptop, and we have that as well. We are totally agnostic. We do the infrastructure with all of the gadget things, and then you need the chipset to connect to the networks. We have the most patents on 2G, 3G and 4G. Basically, anyone that wants to do a wireless or connected device needs to have a license with us.
What are some of the lessons you have learned at Ericsson?
I have lived in seven countries and I have worked in all of the functions in the company except R&D and IT. The thing that I have learned is that leadership is portrayed more here. Our goal is to continue to be the number one telecom provider for the next 135 years. We have learned that technology is extremely important and that spending R&D money is not bad money—it’s great money because then we solve problems and we continue to lead this industry. The other thing we’ve learned is that we are a fantastically diverse company, with people in 180 countries and 100,000 employees. It just shows how you can work in a multinational and multi-cultural world and still have a great success.
Is there a technology that you are keeping your eye on? We are strong believers that standard technologies that can be mass replicated on a mass scale will be the winners. We are looking at 4G propagation of smaller cells and how to optimize urban areas in a very small and dense network. We need to evolve that even more, so we would not look at technologies that are not built on the path that we are working on. Because if we do that then we would need to restart from the beginning, building an ecosystem. Three years ago we didn’t know the word smartphone. Two years ago we didn’t know what a pad was. But I have a lot of confidence in the consumer electronics industry.
“We are strong believers that standard technologies that can be mass replicated on a mass scale will be the winners.”
Is the R&D done around the world?
Yes, we have 27,000 patents including the largest collection of Wi-Fi patents. Radio technology we do in Stockholm, IP is in Silicon Valley and building systems is in India and Sweden. It’s more about where we have the competency pools for the product, so it is spread out all around the world. We have the most advanced technology that you could think about in a base station or radio technology and the same goes for the chipsets. We have 20,000 people in research and development. We do all of our research and development basically ourselves.
How does Ericsson improve the entertainment experience for consumers as the sponsor of Entertainment Matters at CES? We are going to enhance the entertainment feeling because we will see more use of mobile broadband bringing content more quickly to handsets and devices. Our technology will be able to show the difference in latency and the difference in connectivity using the latest technologies. And of course entertainment serves as something that we are all interested in whether it is movies or music or news. Things that we consume, we actually are doing a lot more efficiently. And the experience is cool. That is what we are going to show at CES — how it goes together, how we can improve that by using our technologies and by using a lot of different parameters.
What do you hope to see at CES?
I am very excited. I have never been to CES. I feel very fortunate to be going for the first time and to be able to be a keynote speaker. I am very flattered that Ericsson is going to be represented in that way at CES. It is the first time a vendor in the infrastructure community has had a chance to speak there, so of course, we are very proud as a company.