- 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 grows, the
distribution between strategies starts to even out |
Figure 2: Frontrunners are not necessarily market share
leaders in 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.
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FOR FURTHER INFORMATION, PLEASE CONTACT
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Press release_Ericsson Growth Codes
2.0
Graph_Frontrunner emergence
Graph_Market share distribution
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