New Ericsson CEO Ekholm celebrates first day with major Cisco cloud deal

Börje Ekholm’s first official day as Ericsson CEO coincides conveniently with the announcement of a big win with Cisco to virtualize Vodafone Australia’s network.

Ekholm was revealed as the new CEO of Ericsson back in October of last year, following the departure of long-time incumbent Hans Vestberg earlier that year. The announcement came just weeks after a profit warning caused Ericsson’s already depressed share price to plummetfurther and Ekholm’s appointment offered no immediate respite.

Something had to give, however, and Vestberg had been given a good run. The PR around Ekholm’s appointment is that, while he will presumably be unveiling a new cunning plan at some stage (ideally very soon), he also has the benefit of having been an Ericsson board member for the past decade and so is already up to speed on the idiosyncrasies of the company.

But the flip side of that view is that he has been a board member during a period in which Ericsson’s share price has declined by over 70% (see Google Finance screen below) while its biggest competitor Huawei has gone from strength to strength. There are some mitigating circumstances but general accusations of failing to move quickly enough with the times are hard for Ericsson to refute.

“I am very excited to assume the role as President and CEO of Ericsson, a company that I have admired for as long as I can remember,” said Ekholm. “Ericsson has shaped an entire industry and led technology developments that have benefitted so many. Yet, we are only at the beginning of the mobility journey as we in coming years will see massive transformation across industries as 5G is introduced.”

“I am confident that Börje Ekholm will be able to guide Ericsson on the next steps of the company’s development,” said Ericsson Chairman Leif Johansson. “Having served on the Ericsson Board of Directors for many years, Börje has a deep understanding of the business and the challenges Ericsson currently faces. I also want to express my gratitude to Jan Frykhammar who has served as interim CEO since July last year and who has led the company in a very dedicated and professional way.”

Fykhammar will remains a member of the executive leadership team and has been made EVP and Advisor to the CEO, having previously been CFO. That role is currently being filled by Carl Mellander, but he is still referred to as ‘acting’ CFO, indicating they may still be looking for a permanent replacement.

While it’s reassuring to hear that the Chairman is confident they’ve picked the right man for the job the pressure is immediately on Ekholm, especially since he’s already so familiar with the company, to explain how he’s going to turn things around. And that doesn’t mean continuing to cut jobs until margins start to look healthier; clear, coherent strategic vision is called for.

Ekholm is not expected to speak publicly beyond the above canned quote until the Q4 earnings call on 26 January, and beyond then he needs to have a strong message ready for the start of Mobile World Congress on 27 February. A central theme probably needs to be the prioritizing of Ericsson’s diversification efforts and maybe even abandoning some of them.

One area Ericsson is very unlikely to abandon, however, is virtualization, as that is still considered the key technology to take operators into the 5G era. It is very timely, therefore, that on the very day Ekholm took the helm Ericsson was able to announce the first truly significant win resulting from its strategic partnership with Cisco.

The two companies have been taken on by Vodafone Hutchison Australia (VHA) to virtualize its core and IP network. Furthermore Ericsson is leading the effort, which is expected to yield all the usual NFV and SDN benefits such as efficiency, agility and flexibility. While Vodafone is only the third of three Australian MNOs this is not only a significant proof-point of the Ericsson/Cisco partnership, which hasn’t exactly set the world on fire so far, but a potentially powerful case study in favour of their virtualization efforts – so long as they get it right.

“Ericsson and Cisco are our existing providers of core and routing functions making them good partners to move into a virtualized environment,” said Kevin Millroy, CTO of VHA. “This transformation allows us to introduce new applications to drive innovation and improve customer services and user experience. The new infrastructure opens the door to new business models and markets, such as Internet of Things for Vodafone – we are excited about the future prospects this partnership offers.”

“This major transformation deal clearly demonstrates Ericsson’s global end-to-end transformation and operations capabilities as a trusted transformation partner,” said Rima Qureshi, who heads-up the Cisco partnership at Ericsson. “As the first collaboration between Ericsson and Cisco on telecom cloud infrastructure, it also shows how our global partnership is speeding digital transformation for customers across industries.”

“Cisco and Ericsson have been working with key strategic accounts around the globe to validate a telecom cloud infrastructure,” insisted Yvette Kanouff GM of Cisco’s service provider business. “This broad and significant engagement with VHA demonstrates how our two companies are utilizing our complementary assets to deliver technical and commercial innovation and systems integration leadership to the benefit of our customers.”

Here are the details of the deal from the release: The joint architecture solution comprises of Ericsson Hyperscale Datacenter System and software components such as Ericsson Cloud Execution Environment, Ericsson Cloud Manager, Cloud SDN controller; together with Cisco WAN Automation Engine, Cisco Network Services Orchestrator (NSO), Cisco IP Network VNFs including IOS XR 9000v and Cloud Services Router 1000v, and both virtualized and physical security technologies such as the Adaptive Security Appliance and Cisco Firepower security gateway, along with services and support.

While this is by far the most significant product of the Ericsson/Cisco marriage so far, with all due respect to evolved wifi networks, there have been others, including deals with 3 Italy, Vodafone Portugal, Aster Dominican Republic and Cable & Wireless. It’s not yet clear how central this partnership will be to Ekholm’s cunning plan but it’s certainly not done him any harm to be able to announce a significant win on his first day.