On this episode of The Six Five – In the Booth, hosts Daniel Newman and Patrick Moorhead welcome Yossi Cohen, COO North America at Ericsson.
Their discussion covers:
- The mechanics of Ericsson’s 5G monetization and revenue growth
- How their Vonage acquisition is allowing developers to leverage 5G capabilities
- How Ericsson is optimizing cloud-based networks and RAN without compromising on power or performance
- The next steps in network evolution
It’s a stimulating conversation, and one you won’t want to miss.
Be sure to subscribe to The Six Five Webcast so you never miss an episode.
You can watch the full video here:
You can listen to the conversation here:
Disclaimer: The Six Five In the Booth is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded, and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors, and we ask that you do not treat us as such.
Patrick Moorhead: Hi, this is Pat Moorhead, and the Six Five is live in Barcelona, in the Ericsson booth. I would say in the Ericsson mini show. This place is incredible, Daniel. Everybody is around, everybody is talking, looking at the demos. This show is back.
Daniel Newman: Soak it in everybody, because if you don’t know how to get past security at the front of the Ericsson booth, you’ll never get back here to see what we’re seeing right now.
Patrick Moorhead: Exactly.
Daniel Newman: But this is an incredible experience, and we’re going to have a chance to tour it and look around, but right now we’re going to have a great conversation about 5G, acceleration, monetization, platforms. So much more.
Patrick Moorhead: Yossi, thank you for coming on.
Yossi Cohen: Thank you for having me. You know why their security is so hard. You know why. Well, we just launched the best platforms in the world when it comes to radio. We have 10 new platforms for Massive MIMO, we have new products for in-building. We are actually showing here how to monetize 5G, so it’s very exciting things.
Patrick Moorhead: Well the challenge would be if you didn’t have all this security, everybody would be here and nobody would have any room. So I get it. I feel you on that.
Daniel Newman: No, there’s something about the exclusivity. There’s something about wanting to get in when you can’t get in. Because that isn’t every booth, but this whole experience makes you want to see it even more. And of course, when they’re announcing a lot of good things and breaking stuff and creating excitement in the market, that creates a lot of energy. And you said something though, Yossi, about monetizing 5G. Seems like a pretty big part of the agenda here. Talk about it through your perspective at Ericsson.
Yossi Cohen: Yeah, of course. 5G was developed over many, many years. And the idea is to, of course, bring new technology that allows you to do new stuff, and get more money into the operator system. So I think now we are at the stage, especially in North America where 5G was deployed, and now you’re saying, “Okay, what can I do with it? What are the new things that 5G can bring?”
If you look in reality, people are skeptical. “Where’s the money that came with 5G?” But actually since it was launched two years ago, the operator’s revenue grew by 10%. And if you look at their plans, they actually have different attributes that are associated with 5G capabilities that are actually associated with the plans. And this is just the beginning, because 5G-Advanced and other capabilities are going to come, that will enable monetization.
The stuff that is happening right now, everybody’s talking about fixed wireless access of course. If you look at the net ads of the operators, only half of them or even less are actually phones. It’s pretty amazing. It used to be only phones, now only half of it. And from the residual, half of it is fixed wireless access. Great work by T-Mobile and Verizon. Now AT&T is also jumping into this. And the rest of the half of it is actually other devices, like wearable and tablets etc. And all of this is enabled by the spectrum and the capabilities that 5G brings.
Patrick Moorhead: So in the green room when we were talking to you, in the virtual green room, you talked about the future, maybe some low-hanging fruit that’s out there for the continued build out of 5G. Can you talk about some of those areas?
Yossi Cohen: Yes. Fixed wireless access right now, the operators are addressing specific markets. They need to make sure that there is coverage there. In reality, despite the fact that most of the population already have 5G services, actually we are only halfway into deployment. There’s so much more to add, so much capacity to add. Millimeter wave utilization is still on the way and you need to use other tools to enable this. Operators are looking into utilization of where are you going to put your CPE. Whether you’re going to put it in the window. That will increase by a factor of three or factor of four the addressable market for fixed wireless access, which generates fantastic revenue.
Daniel Newman: So the company made a pretty large acquisition of Vonage. I think some people probably see it and some people are probably saying, “Why Vonage? Why is Ericsson making that kind of acquisition?” But I know you see a fit with 5G, with monetization. Talk a little bit about how you see that vision playing out and why that’s going to be such an important deal in the long term for Ericsson.
Yossi Cohen: We talked about 5G. Coverage has been deployed. The next capabilities are coming in like network slicing, etc. But we really need to be able to enable these capabilities to come to fruition. So how do you do this? You need to start having the applications in the network being aware of each other.
And how do you do that? So if you take for example, Vonage is a platform company. They have a CPaaS platform. They’re using the interfaces they have for SMS voice to provide additional services like two-factor authentication. They work with millions of application developers that take these capabilities and get API to actually have innovation in their application. But CPaaS is limited in the interfaces it has to the network. But we are trying to build with the global network platform the next generation of APIs which utilize way more advanced interfaces.
By allowing application developers to access one platform that gives them access to all the CSPs in the world, innovator. For example, if you are a gamer and you want to have a higher quality of service with lower latency, you want for the game to actually ask for this type of slice. And that’s a way for the application developer to innovate, but also for the CSPs to actually monetize on the 5G platform they bought.
Patrick Moorhead: Strategically I love it. I think one of the biggest things we learned from even IAS and past services globally in the last 10 years is as a developer you really have to know and focus in on those APIs that you know will make you the most money. So I like this because especially if you’re trying to address a global audience, this makes a ton of sense. The question I have is, when is the right time for developers to get involved? Can they do it now? Do it a year from now? When should they start engaging with you?
Yossi Cohen: So first of all, now. We are already talking to them and what we are finding out when we start engaging with them is that they have needs that we didn’t even dream about. Even today, I met one of our partners here and he was telling me about the need they have for an API. I couldn’t have even imagined. And just like two factor authentication was invented in a hackathon. The same way will happen here. Once we engage with application developers, we will understand better what they need. The good thing from an original perspective, on one hand we will have the platform, but on the other hand we are also sitting on the network technology. So we can also learn from the application developer what they need and we can make sure to put it in the standards. We can make sure we put it in our technology, so we can in the future develop these APIs and give them these capabilities.
Daniel Newman: And what you can do with software once you can add that sort of army of developers, is going to create such a big opportunity for what you’ll be able to deliver. And by the way, it’ll sort of reposition the company entirely and how it’s seen in the market. The critical role you play with your core infrastructure hardware to deploy networks is one thing. All of a sudden being seen as sort of the next disruptor in CPaaS and actually playing a part there. See that could be really a differentiator for the entire way Ericsson is seen in the market. I do want to pivot though. It says you did talk a little bit about core network build out. So I think we’re getting to the point where that first part of that initial network has been built out. Where does it go from here? What are the opportunities with 5G beyond this kind of first build out?
Yossi Cohen: So first we need to continue of course. Last year was extremely accelerated and now things are moving into more business as usual. But of course the introduction of 5G SA. If you use the 4G core you will have in many, many cases a similar experience. 5G SA means a way more efficient way of running a network and significantly reduced latency. And latency becomes extremely important.
I don’t have to talk about how the gaming business is one of the biggest businesses we have in North America. If you look at it it’s bigger than the movie industry and the sports industry combined. More than 50% of the gaming industry runs on mobile. That’s a big amount of money. The platforms become stronger and stronger and you need to be able to accommodate that. The gamers are paying customers, it’s a big business. If you give them more capabilities in a device, if you give them, for example, lower latency that will give a better user experience, they will pay for it. And that’s what we are trying to enable. 5G SA will enable network slicing, which eventually will enable the operator to find different layers of the network and allocate it to the different types of use cases.
Patrick Moorhead: So we’ve seen a lot of announcements of cloud players out there, the AWS’s, the Googles, folks like that, the Azures, engaged in helping parts of the network. And I’m curious, the future of your network, how is it cloud enabled?
Yossi Cohen: Yeah, of course. We started the journey to basically virtualize our network functions some years ago. And now we reached the maturity and of course the hyperscales and the cloud providers want all these network functions to start running on their machinery. We are already doing it. We are collaborating with all of them. And for sure some of our customers are interested. I mean you saw the play that AT&T did with Azure. So there is willingness and a lot of operators believe that that’s the way to go. For us, it’s very normal. As I said, our network functions have been running virtually for many, many years. So now it’s going to run on the cloud platform. It will help the speed and scale, that’s for sure. And we see that there is opportunity.
Daniel Newman: We’re kind of coming to the end here Yossi and I really appreciate you breaking this down. Here’s a little bit of a bonus question. How are the customers reacting? What are you really excited about that’s coming out of MWC for Ericsson?
Yossi Cohen: I think some of the launches of the new products that I mentioned before. But I think everybody talks now on generative AI and they are saying, “Okay, it scales so fast and how is that even going into the network?” I think now everybody’s using chat. In a few weeks people will start using audio with generated AI. In a few months it’s going to be video using generated AI. All of this will be running on our networks.
Daniel Newman: Could we do this? Just create an interview in the form of Dan, Pat, and Yossi?
Patrick Moorhead: I don’t know.
Daniel Newman: You don’t even need to show up.
Patrick Moorhead: Maybe that wouldn’t be any fun though.
Yossi Cohen: I don’t know if you’ve seen it, but there are different chatbots that actually started talking to each other.
Daniel Newman: I’ve seen some of it. I’m just saying at some point, could we do this from home?
Patrick Moorhead: I don’t know. I don’t think it would be as fun though. I like hanging out with fun people like Yossi. Yossi I really appreciate the time and I really appreciate you coming onto the Six Five. We’re talking about optimizing networks, we’re talking 5G monetization. We’re talking the future of the network and a brand new way for developers to get access to services that are very high bandwidth, low latency, and everything in between required. So thank you for sharing your insights and what you’re doing with us at the show.
Yossi Cohen: All right. Thank you very much.
Patrick Moorhead: Thanks.
Daniel Newman: Hey everyone, thanks so much for tuning in. Hit that subscribe button. We would love for you to watch all of the podcasts that Pat and I did here at MWC 2023. But for this particular episode, Pat, it’s time that we say goodbye. It’s sad because we’re going to go through security and they may not let us back. We’ll have to ask nicely. Great opportunity here to talk to Yossi. A lot of fun here at the Ericsson booth. But everybody out there, we’ll see you all later. Bye-bye now.