Telefonaktiebolaget LM Ericsson Class A · OMXSTO:ERIC_A
Telefonaktiebolaget LM Ericsson Class A — Ericsson — Investor Day (2014)
90 slides from Telefonaktiebolaget LM Ericsson Class A's investor day presentation, 2014
Slide 1: Establish Leadership in Targeted Areas
ESTABLISH LEADERSHIP IN TARGETED AREAS Head of Strategy Rima Qureshi W
Slide 2: In 2020...
W IN 2020... Collaboration | will be volve -- MBB = TBILLION 8 BILLION 50 BILLION 15 BILLION. tet formance fixed mobile _tconnected | | ee __ broadband broadband" devices) video devices | letworks ‘subscriptions subs¢riptions Ba "4 OF VY . SENTIAL Se , : i. "Gegeee a , MOBILITY BROADBAND — CLOUD
Slide 3: Vision, Mission, Values, Assets
VISION SQ A Networked Society where every person ind every empowered to reach their full potential MISSION We lead transformation through mobility VALUES Trust, Innovation & Performance Professionalism, Respect & Perseverance ASSETS Technology & Services leadership Global scale & skills
Slide 4: Strategic Direction 2014
W STRATEGIC DIRECTION 2014 Future/ Emerging Cloud Radio, Core Present/ & Transmission Telecom industry Modan Large Services Society G4) Excel in core business Establish leadership Expand business in in targeted areas new areas This slide contains forward-looking statements. Actual result may be mate
Slide 5: Different Characteristics
DIFFERENT CHARACTERISTIC CS Market position: Objective: Key success factors: Excel in core business Market leader Improve earnings in core, lead and innovate Performance, efficiency from scale, high barriers to entry © Telefonaktiebolaget LM Ericsson | Capital Markets Day 2014 | Page 5 Establish lea
Slide 6: Investments Across Core, Targeted and New Areas
INVESTMENTS ACROSS CORE, inter? AND NEW AREAS Excel in core business R&D Majority of investments to continue to lead and innovate in core Consolidate and create synergies to drive industry and technology leadership Mergers and Acquisitions Maintain leadership by pursuing cutting edge technology adva
Slide 7: M&A and Partnering Strategy
M&A AND PARTNERING STRATEGY Invest to strengthen competitive assets Invest to accelerate profitable growth uiouy Fill portfolio gaps (BU bolt on) Increase scale & skills Consolidate market position Grow new & targeted areas W
Slide 8: Strategic Direction 2014: Targeted Areas
STRATEGIC DIRECTION 2014 TARGETED AREAS W 2) OSS&BSS V& Media Industry & Society
Slide 9: Criteria
CRITERIA High degree of . Growth software and High degree of potential ; , recurrent revenues professional services Adjacency - fully leveraging Ericsson core business areas Ambition of targeted areas is to significantly improve Ericsson’s earnings towards 2020 W
Slide 10: Market Size and Growth: Core and Targeted Areas
MARKET SIZE AND GROWTH CORE AND TARGETED AREAS W Targeted Areas Market size 2013: ~ USD 110-130 b. ow) CAGR 2013-2017: ~10% OSS&BSS Radio, Core & Transmission Telecom Services Industry & ly Socie' Core Areas Market Size 2013: ~USD 150-160 b. CAGR 2013-2017: ~3-4% This slide contains forward-looking
Slide 11: Targeted Areas: IP Networks
STRATEGIC DIRECTION 2014 TARGETED AREAS W IP Networks Critical in network architectures Handle increasing data traffic - Fast introduction of services a Software Defined Networking disrupting Telecom vs IT paradigm This slide contains forward-looking statements. Actual result may be materially diffe
Slide 12: Targeted Areas: Cloud
STRATEGIC DIRECTION 2014 TARGETED AREAS o-* . aoe oot High performance cloud - Real time ubiquities services access -- Fast introduction of new services W IT paradigm transforming network architectures Cloud and Network Function Virtualization market forming This slide contains forward-looking state
Slide 13: Targeted Areas: OSS&BSS
STRATEGIC DIRECTION 2014 TARGETED AREAS W OSS BSS ae Business models evolving (1->100’s) Operational and business efficiency o” Customer experience management Rapid service introduction Transformation of legacy systems OSS&BSS This slide contains forward-looking statements. Actual result may be mate
Slide 14: Targeted Areas: TV & Media
STRATEGIC DIRECTION 2014 TARGETED AREAS W TV Media IP Transformation Multiscreen and multichannel Quality of service and customer experience Efficiency in production and delivery OTT vs traditional media disruption Media This slide contains forward-looking statements. Actual result may be materially
Slide 15: Targeted Areas: Industry & Society
STRATEGIC DIRECTION 2014 TARGETED AREAS W Industry & Society Industries transforming Innovation around new services Changing business processes Efficiency and sustainability challenges Utilities, transport and public safety Indust Society This slide contains forward-looking statements. Actual result
Slide 16: Transforming Ericsson: Acquisitions and Partnerships
TRANSFORMING ERI TARGETED AREAS IP Networks Cloud — Partnerships and Alliances Acquisitions Ciena, February 2014 MetraTech, July 2014 Apcera, September 2014 Sentilla, October 2014 Partnerships and Alliances Guardtime, September 2014 Indust Society CSSON W OSS & BSS Partnerships and Acquisitions Alli
Slide 17: Strategic Direction 2014: Targeted Areas
STRATEGIC DIRECTION 2014 TARGETED AREAS W 2) OSS&BSS V& Media Industry & Society
Slide 18: Ericsson
ERICSSON
Slide 19: IP & Cloud
IP & CLOUD Head of Networks Johan Wibergh © Telefonaktiebolaget LM Ericsson | Capital Markets Day 2014 | Page 1 W
Slide 20: Leading Transformation Through Mobility
LEADING TRANSFORMATION THROUGH MOBILITY 20 1 Investor Day TRANSFORMATION = OPPORTUNITY © Telefonaktiebolaget LM Ericsson | Capital Markets Day 2014 | Page 2 W 2 @) 1 Press release aw PRESS RELEASE APRIL 24, 2014 ERI NEW BUSINESS UNIT STRUCTURE TO SUPPORT NETWORKS GROWTH ‘© Business unit Networks wil
Slide 21: Agenda
AGENDA W
Slide 22: Shaping the Industry: Transformation
SHAPING THE INDUSTRY TRANSFORMATION Today Transformation Tomorrow journ ey Global cloud based networks W “Providing cloud services to enterprise” products to . market much NETWORK Cem) Radically increased moo MANAGE aor
Slide 23: Shaping the Industry: Transformation Journey
SHAPING THE INDUSTRY TRANSFORMATION Today Transformation Tomorrow journey Global cloud based networks MANAGE pie or a ae eaters at ee Set 3 + Understanding of complexity and architecture . ease ace Competences f ¢ Processes, methods and tools W
Slide 24: Operators' Three Transformation Journeys
OPERATORS’ THREE TRANSFORMATION JOURNEYS W ie Telecom Network Internal IT Commercial Cloud Transformation Transformation Offerings Operator Telecom Operator Virtualized network Virtualized IT functions for Cloud offerings sold as a functions e.g vVEPC, vIMS internal use e.g CRM, OSS/ service (XaaS)
Slide 25: What Is Virtualization?
WHAT IS VIRTUALIZATION? Ericsson Cloud System Ericsson Cloud System SW W
Slide 26: Ericsson Cloud Offering
CRICSSON CLOUD OFFERING Operator Operator Operator Telecom Cloud IT Cloud Commercial Cloud Cloud Transformation Partner Path to NFV* OSS/BSS Modernization New Cloud Revenues Ue e eeu! Media & OSS/BSS_| Commercial XaaS Virtualized : ie ‘ Network Functions Differentiation Offerings Management & Contro
Slide 27: Building Cloud Capabilities
BUILDING CLOUD CAPABILITIES Innovation Competence & Capabilities 1 billion #1 | 39,000+ , Granted Subscribers Mobile infr icture patents oss a TV & Media Delivery WW
Slide 28: Cloud Achievements
CLOUD ACHIEVEMENTS Operator Operator Operator Telecom Cloud IT Cloud Commercial Cloud Cloud Transformation Partner Path to NFV* OSS/BSS Modernization New Cloud Revenues Ue e eeu! Media & OSS/BSS_| Commercial XaaS Virtualized : ie ‘ Network Functions Differentiation Offerings Management & Control End
Slide 29: Achievements
ACHIEVEMENTS (Vj Ericsson selected for AT&T future network strategy “User Defined Network Cloud” Vodafone Australia selected Ericsson for network evolution Ericsson successfully demonstrated multi-vendor proof of concept of NFV with NTT DoCoMo (Vj Ericsson Cloud System launches: Cloud Manager and Ex
Slide 30: Strategy Going Forward
STRATEGY GOING FORWARD * S , ‘ Ne ~, Pat R < ; S ~ #1 Operator Telecom Cloud (NFV) #1 Cloud Transformation Partner Top 3 in Operator IT & Operator Commercial Cloud
Slide 31: Summary
SUMMARY Platform initially for network functions virtualization (operator telecom cloud) Definition Building on our #1 position in Telecom core Present position © Telefonaktiebolaget LM Ericsson | Capital Markets Day 2014 | Page 13 Early market for network functions virtualization. Driven by need fo
Slide 32: Key Takeaways: Cloud
W KEY TAKEAWAYS — CLOUD Todays netwoks need to be modernized and transformed to handle the increasing traffic volume and requirements in the Networked Society. These requirements drive need for speed, agility and efficiency. Why - invest Ericsson Cloud System (ECS) is an enabler to position Ericsson
Slide 33: Agenda: Cloud
AGENDA CLOUD W
Slide 34: Achievements & Challenges
ACHIEVEMENTS & CHALLENGES W Current realities Key remaining challenges [Vj Competitive R&D capability Cj Increase market share VM Expert sales force in place Lj More tier one customers [V #1 in mobile packet core Convert Service Provider SDN trials to commercial deployments [Vj Good traction with IP
Slide 35: Progress & Accomplishments
PROGRESS & ACCOMPLISHMENTS SSR 8000 LINE CARD SHIPMENT VIRTUALIZED & SDN SSR 8000 END TO END SOLUTION MULTI APPLICATION © Telefonaktiebolaget LM Ericsson | Capital Markets Day 2014 | Page 17 e oe. mr 0° 06,0 CO) Cy eee 43 FIXED IP : 3 e CONTRACTS ic $ e saan gi @ "SE" a SERVICE | OP" evormem @) igi
Slide 36: Where Is Service Provider SDN?
WHERE IS SERVICE PROVIDER SDN? Service-Provider Software Defined Networking End to End Infrastructure Data Center [ Storage + Compute + Network ] W
Slide 37: Market Drivers and Outlook
MARKET DRIVERS AND OUTLOOK 3-5% CAGR 2013-2017 W MARKET DRIVERS AND INDUSTRY TRENDS Billion USD 2009 =2010 2011 2012 2013 2017 Traffic increase Backhaul optimization Network simplification Service innovation Programmable network Efficient service delivery Included: IP Edge, Metro Aggregation & corre
Slide 38: High Attention on Sales Execution
<High attention on sales.execution. This slide contains forward-looking statements. Actual result may be materially different.
Slide 39: Summary
W SUMMARY IP Edge, Metro Aggregation, CAGR 2013-2017: 3-5 % Alcatel-Lucent, Cisco, Huawei, Juniper Systems integration A 14-16 billion USD market 2017 Mixed solution approach All numbers including SDN MARKET OUTLOOK Low single-digit market share Top 3 in IP Networking for operators Complete IP Portf
Slide 40: Key Takeaways: IP
W KEY TAKEAWAYS — IP The IP networks market is a significant market of around 13 b USD which, with the introduction of SP-SDN, will grow with 3-5% annually. The introduction of of SP-SDN enables great opportunities for rapid changes in the market. Why - invest We offer solutions for operators to man
Slide 41: Ericsson
ERICSSON
Slide 42: Operations and Business Support Systems (OSS and BSS)
OPERATIONS AND BUSINESS SUPPORT SYSTEMS (OSS AND BSS) Head of Support Solutions Per Borgklint W
Slide 43: Shift from Voice to Data Drives Operator Transformation
SHIFT FROM VOICE TO DATA DRIVES OPERATOR TRANSFORMATION From... VOICE & [BI INTERNET MULTIPLE SYSTEMS | Markets Day 2014 | Page 2 To... Garr ae CHATTING FILESHARING MAIL TV &VIDEO M-LEARNING E-COMMERCE MUSIC MONEY TRANSFER E-BOOK CLOUD Oo ® NETWORK COMPETENCE ORGANIZATION UNIFIED OSS and BSS SYSTEMS
Slide 44: Industry Trends in OSS and BSS
INDUSTRY TRENDS INOSSAND BSS #2 PERSONALIZED EXPERIENCES NEW BUSINESS MODELS EXTREME OPERATIONAL EFFICIENCY
Slide 45: OSS and BSS Must Evolve to Meet Networked Society
OSS AND BSS MUST EVOLVE TO MEE THE NETWORKED SOCIETY DEMANDS Ox o CUSTOMERS SERVICES NETWORK Customer New service Cloud Examples P ; : P interaction launch orchestration OSS and BSS are essential in enabling agility and driving growth in existing value chains and innovation in new business models W
Slide 46: Process Based Portfolio and Global Delivery Capabilities
PROCESS BASED PORTFOLIO AND GLOBAL DELIVERY CAPABILITIES Ov o CUSTOMERS SERVICES NETWORKS W istomer/Partner Management and Interacti Front PI End: ial ons Provision 10 Regions Data-to-Experience Global Service Centers: India, China, Mexico, Romania Network & Cloud Management 1,500+ projects per year
Slide 47: OSS/BSS Market Drivers and Outlook
OSS/BSS MARKET DRIVERS AND OUTLOOK Addressable Market* W Market drivers and Industry trends USD b Serving Communication Service Providers 70 60-68 * End-user experience is becoming 60 critical for operators 50 46 49 St + Market moving from best-of-breed to best-of-suite to reduce 40 complexity and o
Slide 48: OSS and BSS Market Position
OSS AND BSS MARKET POSITION A\\ 1500 16,000 Consulting and SI Consulting and projects per year Sl professionals Working with the world’s leading operators 900 >2 7 sition RANKED:#1 . | suBs WORLDWIDE FOR OSS systems Served by Ericsson > OSS: in operation Charging and Billing > BSS > Service Delivery
Slide 49: Significant Progress in 2014 to Reach #1 Position
W SIGNIFICANT PROGRESS IN 2014 TO R #1 POSITION ei NETWORK CUSTOMERS SERVICES Ericsson Expert Ericsson Charging Ericsson Network Analytics System 6.0 Manager Cloud Transformation Services Capability Development TeliaSonera T-Mobile CenturyLink | Contract wins bolaget LM Eric al Markets Day 2 gee @me
Slide 50: Strategy Going Forward
STRATEGY GOING FORWARD Strategy going forward Reduce network complexity with our evolved pre-integrated OSS and BSS software suite Expand suite into cloud, analytics, new verticals and SaaS models Extend world-class business process transformation consulting practice Leverage scale through global sa
Slide 51: Summary
SUMMARY Operations and Business Support Systems Definition #1 position in global software and services Present position © Telefonaktiebolaget LM Ericsson | Capital Markets Day 2014 | Page 10 Market size 2013: USD 51 b. CAGR 2013-2017: 5-7% Market outlook Preferred ICT transformation partner Wanted p
Slide 52: Key Takeaways: OSS and BSS
KEY TAKEAWAYS — OSS AND BSS Why - invest What - offer How - success © Telefonaktiebolaget LM Ericsson | Capital Markets Day 2014 | Page 11 W The IT systems of the telecom networks of today are built to handle traditional telecom services such as voice and SMS. With mobile broadband and introduction
Slide 53: Ericsson
ERICSSON
Slide 54: TV & Media
TV & MEDIA Head of Support Solutions Per Borgklint © Telefonaktiebolaget LM Ericsson | Capital M is Day 2014 | Page 1 W
Slide 55: Global Growth in Media Consumption
\ GLOBAL GROWTH MEDIA CONSUMPTION & Mobile IPTV broadband Gj subscribers TW = Data traffic growth Smart 15 BN Video OTT and traditional Enabled TV growth devices Devices growth $ Global wealth © Telefonaktiebolaget LM Ericsson | Capital Markets Day 2014 | Page 2
Slide 56: Media Industry Transformation
MEDIA INDUSTRY TRANSFORMATION Z eerct--L. Pay Per View Ny Gari Advertising ming \ TV Operator and Berclecstesa-ae)) lelevision ' 1 Radio / Subscriptions 7 LT] ¢ = == Public Funding 7 S = 7 ec = EES Newspapers Magazines / oer edo essen | espielbesn 5 2014) Pogo Global Media Market
Slide 57: TV & Media Industry Overview
TV & MEDIA INDUSTRY OVERVIEW Public funding = Advertising Global TV Delivery Industry Subscriptions Content Content Service _ Devices Production Management Playout Provisioning Distribution Consumption TT Content Providers < i) > | Aggregators | E> BP tVoperators © Telefonaktiebolaget LM Ericsson |
Slide 58: Ericsson Has Secured a Leading Market Position
ERICSSON HAS SECURED A LEADING MARKET POSITION a a: Globally deployed Provider of broadcast Awards for TV IPTV platform, services, managing technology, including delivering services to over 500 linear and 5 Technical Emmy 17M subscribers in OTT channels Awards 32 countries delivering 2.7M hours of c
Slide 59: TV & Media Market Drivers and Outlook
TV & MEDIA MARKET DRIVERS AND OUTLOOK USD b. ; Addressable Market Market drivers and Industry trends serving Broadcasters and Communication W 28 Service Providers ; ; ; Products + Media experience and delivery 20 19-21 efficiency drive investments 1s . 44 13 Systems + Industry looking for IP 10 Inte
Slide 60: Key Progress During 2014
KEY PROGRESS DURING 2014 Capability Development » TV Platforms - Ericsson MediaFirst TV Platform » Video Processing - Ericsson Virtualized Encoding » Broadcast and Media Services - Ericsson Live Subtitling — Ericsson Cloud enabled Media Management © Telefonaktiebolaget LM Ericsson | Capital Markets
Slide 61: Ericsson MediaFirst
ERICSSON 2 Search ERICSSON MEDIAFI You Resume PP Fesume “S) SKYFALL The Butler Man of Steel Breaking Bad Drive Skyfall Mad Men The Press INFO for detail 43 min left 11 min left 58 min left 49 min left 22 min left 1510 im > > > > >
Slide 62: Strategy Going Forward
WW STRATEGY GOING FORWARD Strategy going forward Wanted position Strengthen leadership position in IPTV platforms building on existing footprint Establish a differentiated position in video- centric networks Excel in video transformation through our end to end professional services capabilities Leve
Slide 63: Summary
W SUMMARY TV and Media for Telcos, Market size 2013: USD 13 b. CISCO, Huawei, Arris, Cable and Broadcasters CAGR 2013-2017: 11-13% Harmonic, ALU, Arqiva, Encompass Definition Market outlook Competition Market leader in IPTV platforms, The leader in the IP Leverage our global reach, compression & bro
Slide 64: Key Takeaways: TV and Media
KEY TAKEAWAYS — TV AND MEDIA W » Today about 40% of the data transfered in the mobile networks are video and we expect the consumer demand to continue. This will generate a growth of video data traffic in the mobile network to increase 10 times » Convergence between Media, IT and Telecom happening r
Slide 65: Ericsson
ERICSSON
Slide 66: Industry & Society
INDUSTRY & SOCIETY Head of Region Northern Europe & Central Asia, Charlotta Sund Head of Global Services, Magnus Mandersson © Telefonaktiebolaget LM Ericsson | Capital M is Day 2014 | Page 1 W
Slide 67: Mobility Is Changing the World
MOBILITY IS CHANGING THE WORLD &
Slide 68: Significant Deals During Last Two Years
SIGNIFICANT DEALS DURING LAST TWO YEARS eseees 6 > - HYDRO QUEBEC SAO JOSE DOS VOLVO CARS SMART METERIN iC Cc c = Ele G CAMPOS CONNECTED VEHICLE DISASTER AND EMERGENCY MANAGEMENT
Slide 69: Connecting Industries
vrata EN CONN INDUSTRY |
Slide 70: Focus Industries
W 3 FOCUS INDUSTRIES Utilities Transport Public safety co FP o lim, [C3 Sy] Se Es
Slide 71: Why Invest in Industry & Society?
WHY INVEST IN INDUSTRY & SOCIETY? Selection criteria Re-use of core capabilities Concentrated market Global replicability Large and complex customers Mobility enabled disruptive shift W
Slide 72: Why Ericsson?
WHY ERICSSON? Transformation partner ICT technologies Global operations End-to-end responsibility Managing complexity Technology & services leadership Global presence & scale © Telefonaktiebolaget LM Ericsson | Capital Markets Day 2014 | Page 7 W
Slide 73: Market Drivers
MARKET DRIVERS Sustainability Urbanization Innovation ¢ Business models * Value chains W
Slide 74: Co-opetitive Landscape
CO-OPETITIVE LANDSCAPE IT Consultants and Solution Providers ICT Infrastructure Vendors Industry Specific Players W
Slide 75: Industry & Society
W INDUSTRY & SOCIETY [unives | [Transport | f be cee SE" We are together transforming the targeted industries by leveraging our existing products and services iad scale This slide contains forward-looking statements. Actual result may be materially different.
Slide 76: Summary
SUMMARY Focus on Utilities, Transport and Public Safety Definition Transformation partner across Business, Networks and IT Present position © Telefonaktiebolaget LM Ericsson | Capital Markets Day 2014 | Page 11 Large, fragmented market with good growth Market outlook Preferred partner in selected in
Slide 77: Key Takeaways: Industry and Society
KEY TAKEAWAYS - INDUSTRY AND SOCIETY Why - invest What - offer How - success © Telefonaktiebolaget LM Ericsson | Capital Markets Day 2014 | Page 12 W Many industries are transforming with the Networked society and companies are exploring new opprortunities and seek for mobile solutons. Customers are
Slide 78: Ericsson
ERICSSON
Slide 79: Resource Allocation
RESOURCE ALLOCATION Head of Strategy Rima Qureshi W
Slide 80: Ericsson Today and Tomorrow
Ericsson Today Technology and services leader in telecoms » Leadership positions - #1 in Mobile Networks - #1in OSS and BSS ~ #1 in Services — #1 in Media Delivery, IPTV >» Competitive assets - Technology leadership — Services leadership — Global scale & skills Ericsson Tomorrow Industry leader in t
Slide 81: Financial Implications
Slide 82: Profit Improvement
Slide 83: Financial Characteristics: Targeted Areas
Slide 84: Financial Impact: Targeted Areas
Slide 85: Financial Structure: Targeted Areas
Slide 86: Business Models Evolution
Slide 87: Sales Mix Development
Slide 88: Summary
Slide 89: Ericsson
Slide 90: Slide 90