EY and Ericsson study maps successful mobile operator strategies
(Thomson Reuters ONE) -
* Ericsson and EY collaborate to identify three distinct strategies adopted by
successful mobile operators, dubbed Frontrunners
* Successful operators share a common focus on network performance and
customer experience; differentiation, innovation and technology approaches
vary by strategy
* Frontrunner revenues grew at 9.6 percent CAGR, their competitors at 2.7
percent, while average in markets with no Frontrunners is -1.4 percent
(2010-2014)
With traditional revenues under pressure and mobile data use soaring, operators
have been forced to evolve both their networks and their business models. Some
have been more successful than others. A study from Ericsson (NASDAQ: ERIC), in
collaboration with Ernst and Young, has identified and classified these
operators as Frontrunners. Between 2010 and 2014, Frontrunners enjoyed a 9.6
percent CAGR while competitors in their markets achieved only 2.7 percent.
In undertaking this research, the results of which are launched today, Ericsson
has identified three distinct strategies adopted by Frontrunners. Significantly,
what is good for the end user is also good for the operator.
Frontrunner strategies:
* Quality-led progression: These Frontrunners differentiate through high-
performing networks and high brand preference
* Market-led adaptation: Includes Frontrunners that differentiate through
quick adaptation to market conditions
* Offering-led transformation: Refers to Frontrunners that differentiate by
being first to market with uniquely designed offerings
The study also revealed a number of ways in which Frontrunners are similar
including their views on connectivity and services as differentiators rather
than commodities, and their focus on innovating new revenue streams rather than
maximizing old ones. Frontrunners display greater interaction between marketing
and technical roles, rather than the traditional silos, and they leverage
network performance by either utilizing superior network performance as a
differentiator or by improving network performance to meet customer
expectations.
Martin Sebelius, Executive Director of Nordic Advisory, EY, says: "We clearly
see that despite their different strategies, frontrunner operators share a
common commitment to network quality. Not surprisingly, Frontrunners constantly
seek new ways of challenging industry conventions to make connectivity more
relevant to people, business and society."
Stéphane Téral, Research Director, Mobile Infrastructure and Carrier Economics,
Infonetics Research, now part of IHS Inc., says: "This is a well-reasoned study
that helps operators in different markets answer the universal question of where
to invest and generate returns. Operators are trying to keep up with the growth
in data traffic while facing significant economic conditions, including flat-to-
declining revenue in often saturated markets. As it provides a nuanced view
drawing on a global scope, this study is exactly what is needed for operators to
thrive in any market condition.
"In addition, mobile consumers are very savvy today and understanding what makes
operators tick can help them make better decisions as to where to lock in their
subscriptions -- I think this study could be as interesting to consumers as it
is to operators," Téral says.
Patrik Cerwall, Head of Radio Strategic and Tactical Marketing, Ericsson, says:
"We wanted to understand what makes operators successful in order to be the best
partner to our customers. It may sound self-serving, but Frontrunners focus on
growth, both enhancing the core business while at the same time exploring new
markets and capabilities to secure future revenues, such as IoT (Internet of
Things) and vertical solutions.
"The journey toward 5G in 2020 will be marked by both new technology advances
and new business models, but that transformation really started with the shift
from voice to data-driven networking. The operators who are managing that
transition successfully may provide the blueprint for success in 5G," Cerwall
says.
Understanding these strategies can help more operators become Frontrunners. This
may have a beneficial effect for all operators, as it appears that the presence
of a Frontrunner in any given market benefits all operators in that market:
peers of operators in markets with Frontrunners are growing at 2.7 percent while
markets without Frontrunners have negative growth of 1.4 percent.
In 2013, most of the 12 identified Frontrunners were associated with the
Quality-led strategy, leveraging their size and assets to deliver superior
quality, and thereby achieve profitable growth. Market-led operators were in
the minority and Offering-led operators had not yet joined the Frontrunner
ranks. In 2014, the number of Frontrunners increased to around 20 and included
Offering-led operators. By 2015, it is projected that there will be 30 or more
Frontrunners, with distribution between strategies starting to even out. It is
important to recognize that Frontrunners are not necessary market share leaders
in their respective regions. In fact, in 2013, most Frontrunners were #3 by
market position. By 2015, it is projected that this, too, will even out with
Frontrunners having representation across the top three market share positions.
Figure 1: As the number of Frontrunners Figure 2: Frontrunners are not
grows, the distribution between necessarily market share leaders in
strategies starts to even out their respective regions
NOTES TO EDITORS
Growth Codes
Download high-resolution photos and broadcast-quality video at
www.ericsson.com/press
Ericsson is the driving force behind the Networked Society - a world leader in
communications technology and services. Our long-term relationships with every
major telecom operator in the world allow people, business and society to
fulfill their potential and create a more sustainable future.
Our services, software and infrastructure - especially in mobility, broadband
and the cloud - are enabling the telecom industry and other sectors to do better
business, increase efficiency, improve the user experience and capture new
opportunities.
With approximately 115,000 professionals and customers in 180 countries, we
combine global scale with technology and services leadership. We support
networks that connect more than 2.5 billion subscribers. Forty percent of the
world's mobile traffic is carried over Ericsson networks. And our investments in
research and development ensure that our solutions - and our customers - stay in
front.
Founded in 1876, Ericsson has its headquarters in Stockholm, Sweden. Net sales
in 2014 were SEK 228.0 billion (USD 33.1 billion). Ericsson is listed on NASDAQ
OMX stock exchange in Stockholm and the NASDAQ in New York.
www.ericsson.com
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FOR FURTHER INFORMATION, PLEASE CONTACT
Ericsson Corporate Communications
Phone: +46 10 719 69 92
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Press release_Ericsson Growth Codes 2.0:
http://hugin.info/1061/R/1917710/686075.pdf
Graph_Market share distribution:
http://hugin.info/1061/R/1917710/686077.jpg
Graph_Frontrunner emergence:
http://hugin.info/1061/R/1917710/686076.jpg
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Source: Ericsson via GlobeNewswire
[HUG#1917710]
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Datum: 04.05.2015 - 07:00 Uhr
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