Ericsson, the world’s top mobile network equipment maker, said on Monday it substantially extended its lead in the industry last year as it sacrificed margins in exchange for expanding its client base. Ericsson’s core profit halved in the fourth quarter as it was hit by lower margins and a slowdown in the industry.
Speaking at the technology industry’s annual gathering in Barcelona, chief executive Hans Vestberg repeated the company’s forecast that margins would remain under pressure for a couple of quarters as low margin projects and higher services sales dominate the business mix.
But he said Ericsson’s strategy of expanding its footprint with operators had been successful. “Last year we were focusing on gaining market share, the early indication right now when we have closed 2011 is that we went from 32 per cent market share to 38 per cent market share in mobile infrastructure,” Vestberg said.
“That is quite a big increase in market share in one year alone, reflecting our technology leadership, our position with the right customers in the right markets.” Ericsson’s nearest rivals in mobile networks are Nokia Siemens Networks and China’s Huawei.
Consolidating its position in the market will mean Ericsson can cash in on the revolution in mobile telephony, driven by smartphones and tablets that are generating huge volumes of data traffic in networks.
“Last year we ended, if you take high data traffic smartphones, with roughly 10 per cent of subscribers having that,” Vestberg said. “It .. shows how quickly it has grown, but also shows how much is left.” Operators will need fast, high-capacity networks to meet the demand for data, mainly video, over the next few years.