Ericsson to reorganise, hires 500 engineers

The world’s leading maker of mobile phone networks, Ericsson said Friday it is reorganising itself into three units and will recruit 500 engineers to accelerate its research and development in “growth areas”.

The Swedish giant said in a statement that the three new units will include networks, global services and multimedia and will be running by Jan 1, 2007.

The firm said its new engineers will focus on developing products for “next generation IP-networks and multimedia”.

Carl-Henric Svanberg, president and CEO at Ericsson, said: “We will leverage our position in mobile networks, services and transmission and expand our leadership in next generation converging IP-networks with a focus on multimedia applications and services. Multimedia is an area with obvious business opportunities and potentially a powerful driver for increasing network capacity and investments by operators.”

Sylvain Fabre, research director at Gartner’s communications group said while ther’s nothing unusual about Ericsson’s move, it does illustrate remarkable intent on getting the future right. “There’s this new potential in multimedia… and they are recognising that besides services and WCDMA… multimedia presents things that are not familiar to a traditional telecoms player.”

Fabre pointed to Ericsson’s announcement in April that it would launch a voluntary redundancy package to 1,000 of its Swedish employees between the ages of 35 and 50. The idea is to keep the firm alive with fresh minds who are in touch with emerging markets and trends.

Fabre explained: “The skill set you have as a traditional telco is different to that… in the IP world which is about other things. This is a strategic move to ensure they maintain their leadership in the future.”

The new organisation will affect the current business units and the Stockholm headquarters, the firm said.