Ericsson Looks to Wire the Developing World

By Sam Schechner 

LAGUNA BEACH, Calif.--A few years ago, Swedish networking giant Ericsson made a profitable bet on the growing but largely low-margin smartphone business: getting out of it.

Now the nearly century-and-a-half-old company that makes wireless phone networks and other gear and services for phone companies wants to capitalize on the rise of cheap, low-margin smartphones by building out mobile networks to serve billions of people who will buy the new phones in the developing world in the next five years.

"We sell exactly the same radio technology in New York as we do in Nigeria," said Ericsson Chief Executive Hans Vestberg, speaking Tuesday at the WSJD Live global technology conference. "That has driven down the cost dramatically."

Ericsson is looking to wire the developing world in part because growth in its main markets--including the U.S. and Japan--has peaked. Meantime, investment in Europe in fourth-generation networks known as 4G has lagged, and been less profitable because of heavy competition from China's Huawei Technologies Co.

The new battleground is in emerging markets, where Huawei is also aggressive. Companies like Facebook Inc. and Google Inc. are also racing to wire those markets with ambitious projects involving blimps and drones, offering potential competition for bringing Internet service to the next billion people.

Ericsson controls a third of the global market for wireless networks, but has seen that share fall from 39% in 2011, according to market research firm Infonetics. In that same period, between 2011 and 2013, Huawei saw its market share of wireless network equipment globally grow from 14% to 19%.

Mr. Vestberg said the Swedish networking giant is working on technology to build out mobile networks that require fewer locations and towers to ease the rollout of networks across Africa and other parts of the world. "We're working a lot with solar panels," he added.

For Mr. Vestberg said the real disruption of the Internet has yet to come.

"We think we have seen the revolution? We haven't seen it yet," Mr. Vestberg said, calling the current pace of change slow.

"We're going to have the Facebooks of Nigeria. They will innovate because they will be connected."

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