He’s a senior writer with GigaOM, and he’s going to be talking with Ulf Ewaldsson, who’s the CTO of Ericsson, and they’re going to talking about, Cloud, if not mobile, then what? Please welcome David and Ulf to the stage.
David Meyer 00:26
Ulf, thanks very much for joining us.
Ulf Ewaldsson 00:27
Thanks a lot for having us.
David Meyer 00:29
Let’s start off with an announcement that Ericsson made recently, which was that you’re going to build and open up three new cloud research and development centers, a couple in Sweden, one in Canada, what’s that all about?
Ulf Ewaldsson 00:42
Right, a couple of weeks ago announced that we would build three big data centers, but that is mainly to support our own R&D. In the mobile space it takes a lot of software to run mobile networks, and as a leader in that space – I think we’re the fifth largest software company in the world actually, looking at revenue, of all software companies. That takes a lot of support, so we’re building these data centers mainly for our internal support of those centers, as well as supporting some of our customers.
David Meyer 01:10
It’s interesting you call yourself a software company, because not traditionally hot people think of Ericsson. If you can briefly outline what Ericsson’s vision of software defined networking is, because that’s really the thrust here.
Ulf Ewaldsson 01:24
It’s impressive when you sit in a conference like this and everyone is looking more and more I would say towards the networking piece, particularly in the data centers. We’re then expanding that term in terms of making the networks more relevant also to the data centers, so we’ve talked about something that we call Service Provider STN, which is basically where all the services that are created and run and built in data centers can use the network capabilities, something that we know very well, much more efficient, much better. In other words, to give an example of that would be an end-user experience on a game console or something like that, that would really benefit from having a much higher performance on the actual device where the service is consumed, based on that we could slice the network. This is the term we are using where we could build an exclusive path through the network from the cloud that happens at the instant that someone wants to use that. The networks today are not capable of that, they’re all based on a best effort way of working, and if you’re in the cloud with your software, even though you’re globalizing your software through many data centers all over the world, you still have that latency issue, or an issue to really have that high performance happening, so that’s where we see the future of STN technology – being able to make the networks more relevant in service provider STN implementations.
David Meyer 03:00
And that’s using existing infrastructure you’re talking about, instead of putting a new layer on top of it?
Ulf Ewaldsson 03:04
David Meyer 03:05
Ericsson the hardware manufacturer, what future lies down the road in that context for Ericsson?
Ulf Ewaldsson 03:12
Like I said, the biggest revenue we have is in software, but of course a radio base station, if you will, that’s something that everybody knows about I think, that’s the poles that you see on the countryside and in the cities with all the antennas on them, that’s the basic foundation of mobility or how we create mobility. Now, mobility is fairly technically complicated. You have to keep track of a lot of things around the mobiles. Every time a car turns a corner, or a person walks into a shop, there are lots of things happening in terms of radio conditions and so on, so it’s a very software intensive situation. A lot of that hardware, even though less than 30% I think of the investment in a mobile network is hardware – counting all the radio base stations – a lot of that is very specialized, so that will not change so much. When you come higher up in the network, and you find what you can call a â€œcloudificationâ€ or the virtualization of many of the platforms that are running some of the applications that are delivered through the network, then I believe that cloud has already made its entrance. The data centers of the big operators, of the Vodafones and Deutsche Telecoms of the world, and so on, those data centers are already gaining capabilities which comes from the mobile industry typically. There I think it’s more general hardware, but also there, some of the routing technologies, some of the specialized hardware technologies that are going in there – something that we’re investing in a lot – is also getting more specialized, even though there’s a generalization as well.
David Meyer 04:46
What’s in it for the carriers? Is it an efficiency thing, they can be more efficient in their business processes, or is it about offering new services?
Ulf Ewaldsson 04:58
The carriers are going under a very, very big change at the moment. And I think everyone is aware that we’re moving away from the voice-centric tariffing and the voice-centric proposals, and we can see that that means a very big change of networks, because all the networks that are built are very voice-centric from the beginning, and we’re in the big transition to becoming totally data-centric, totally IP-centric, and as well, not only the services, but also all the technologies. It’s a very big transition for them. On the other hand, when that is happening, new revenue streams open up as possibilities for others to create services on their networks – something that is referred to as over-the-top. But over-the-top, I would argue, is where all the innovation power and all the future services really are being created. Now it’s about opening up those networks, getting APIs possible for even controlling part of the voice engine in those networks.
David Meyer 05:56
What’s in it for the carriers in the sense of, as you say, a lot of it is about enabling over-the-top service, which the carriers themselves aren’t doing a great job in at the moment, shall we say, so why should they be interested in making life easier for somebody riding on top of their network in that sense?
Ulf Ewaldsson 06:14
Right, and in particular if you’re only charging for voice, then all the Skypes of the world are your biggest enemy, but if you’re changing that to a data-centric model – which is already happening in the US, both AT&T and Verizon have share plans in place where you charge for pots of data, based on a number of devices, and the voice services and the SMSs and the legacy is already included there, it’s just part of the package. And in that sense every bit that’s consumed by an application that happens to be over the top is actually a revenue stream. In that sense that’s changing the relationship, where they used to be enemies, there is more love, and that love is something that is very important, because that unleashes all the power of the innovation of the internet into the mobile industry, giving us then the reason to say that mobility is probably one of the most important components of the future internet.
David Meyer 07:12
There’s quite a tension though there isn’t there between the capabilities of STN and the principles of net neutrality, which is a really hot topic at the moment in Europe with the recent proposals coming out of the commission. Do you think that you can realize the benefits of an STN approach such as Ericsson’s if you are in a system of net neutrality?
Ulf Ewaldsson 07:32
For us it’s very much about the services in the cloud, all that innovation power. Much of its being talked about in this conference, both how to realize it, how to manage it in the cloud, and how to connect clouds together. But at the end of the day, the networks that are doing that work, bringing all this out to the mobile devices – just this year we’re adding one billion mobile internet subscriptions in the world, so there’s an enormous growth – and to be able to provide all that you need network investments. And those network investments has to come from differentiation between networks, as always leading to a better and better network. The only reason why the innovation power that’s going on in the clouds will not be unleashed or not happen is if the networks are not good enough. And we’ve seen over all the years Ericsson’s been working with these kind of technologies, we have innovated a lot of things that we want to do, and then we see that cannot be realized because the networks are not good enough. And I think there are many, many examples of visions we see – for instance in movies, in movies you already have face recognition on the inside of your glasses, and last time I checked I didn’t have it – so I think in that sense, in order for that to happen, it has to have a very responsive, very, very fast network. I would even say that it’s more of a vision than a reality, it’s hard to.
David Meyer 09:00
Moving slightly away from that kind of issue. Tell us a little bit about Ericsson’s Connected Vehicle Play, because you had a deal with Volvo at the end of last year I seem to remember?
Ulf Ewaldsson 09:13
David Meyer 09:13
What’s happening with that, you’re basically trying to bring cloud into the automotive?
Ulf Ewaldsson 09:19
We sat down and we were thinking, What is really moving in the world? And we came up with cars, it wasn’t that hard to figure out. In that sense it was very obvious that the car industry would be extremely interested in the whole mobility play. We started to talk to many manufacturers, so we were not by any means only with Volvo, but the press release which I think you’re referring to, I believe it was November, December last year or something like that, is really about being able to have apps in the car which are supported by the car manufacturer, if you will. They would have their own cloud where they store a number of softwares and pieces that makes the car experience a better experience, and that’s why we did that with them. And in that we’ve also built in some features that make the network perform better depending on how these different applications want to be displayed in the car and used by the car. And I think this is just the beginning, I can see many, many other things, including eventually remote control cars going down the road, but even if – I don’t know how much you believe about the 4G systems that are being rolled, or the LT, I know it was recently launched here in London – but I have some bad news, that they can’t handle remote controlling vehicles yet. In that sense there is a lot of network relevance that has to come into play in order for those kinds of services to be developed.
David Meyer 10:48
Can you just firm up for me where Ericsson sits in that new ecosystem? Because I’m trying to get my head around it, and I’ve been tracking Nokia’s Here platform, obviously going in there a lot. Who do you partner with and what part of this whole cloud experience are you providing specifically?
Ulf Ewaldsson 11:06
One important thing to remember is that this is not really happening globally as much as you would like to–
David Meyer 11:14
Ulf Ewaldsson 11:14
And when you listen too many of the other speakers this morning you have a feeling that all this is happening at once over the planet, but there is some big differences here. A lot is happening in North America, in the United States no doubt, some is in Europe and some is in some of the Asians like Korea, Japan and so on in terms of enormous data growth on the networks in terms of new services coming from the cloud, and so forth. We are of course focusing a lot on customers that we have in those markets where it’s happening most. We are present in 180 countries, we have around 400 carriers as our main customers. We are working as much as we can with those carriers who want to make a bigger statement and be able to provide a better network to make the cloud services more relevant and make their networks more relevant. That’s where we sit in the ecosystem if you will, to really make sure that that can happen much better. Having said that, mobility is also an enormous trend all over. I think I don’t have to spend a day in California without just running into a bunch of companies that are looking at mobility as one of their key strategies. Every big manufacturer of any electronics has mobility as one of their key strategies, and having said that many of those companies are also coming to us and asking for how could they use mobility much more in order to evolve their business. We came up a few years ago with this vision of the 50 billion connected devices 2020, which made some impact I believe, and that means that we will see many other things than just people in cars being connected, and of course for many businesses that will transform businesses. I think that we are in the beginning of that big transformation where mobility and the possibility of mobility will transform just about any business, to be honest.
David Meyer 13:14
Do you think there’s going to be any impact from the recent surveillance scandals for people’s enthusiasm for connected stuff? Do you think that some people may not like the idea of their car talking to some central cloud service, or do you think it’s going to blow over from that perspective?
Ulf Ewaldsson 13:33
No, I think there’s going to be impact from that, and I think it’s very important that that debate comes up. I think the trust and the security is the foundation for all of this. I’m a little bit surprised that it took so long until we got that debate really going. At the same time, because so many people are already doing all the Facebook stuff and everything over a mobile device – it’s even much bigger than it is over the fixed internet today – so I think it’s an important debate that people can trust it. We do a lot of consumer surveys in Ericsson – we have something called consumer lab where we work very hard to understand how end-users of mobile services perceive them and so forth, and we did a poll here in many, many, many countries, which shows that about 90% are changing their behavior on mobile devices based on the security issue that they feel that there is. At the same time, only 4% said they would use it less, the rest said they will use it more. I think usage will continue to go up, but the trust issue and the security issue is very, very important.
David Meyer 14:45
We don’t trust it, let’s use it more. Is that the thing?
Ulf Ewaldsson 14:48
In a way I think we just need to be more careful. I also think that the whole debate about surveillance and governments looking at things and so on, I think it’s very, very important that comes under a very strong governance, and I think the debate about that should really be about how is governed, how is that controlled? So it doesn’t go out of control, because technology in this is so powerful. Technology can do anything, and I think the legislation and people’s perception and so on is way behind technology and that has to catch up.
David Meyer 15:23
Just on a technical level, obviously Ericsson is a router manufacturer and all of that, I would imagine if you’re selling into the US you’ve got to abide by CALEA, the lawful intercept rules, and you have to provide a way in. Is that something that you’d also have to do for a connected vehicle?
Ulf Ewaldsson 15:43
It can be very clear there. There is a standard lawful intercept module in every carrier’s network, and that’s for all carrier material. And that is under a very legal restrictions, and there it’s very well-governed what can be done and by whom and so on, so that we deliver to the market. What we don’t engage in at all, and what the debate is about is particular backdoors and things like that. That we don’t do, and we have no relationships with any governments on those issues. And we stay very clear there, because that’s an extremely sensitive area and we don’t want to get anywhere near that.
David Meyer 16:22
I can imagine. We have one minute left, so does anybody have a question for Mr. Ewaldsson? Is that one? Oh no, oh yes.
What’s your view on network function virtualization?
Ulf Ewaldsson 16:40
There’s a forum in Europe, the NFV of course, which is driving that to a very [inaudible] way. I think that’s very positive. There are issues around how much should be standardized and so forth in terms of virtualizing functions in the network. There is no doubt that the market is going there and we’re virtualizing every software we have to run the core network already next year. The real issue is, can we really unleash the potential of all that using STN technology and so forth, and I’m really hopeful that the standardization body in Europe under ETSI, or working with ETSI, in terms of NFV. We’ve come to the conclusion that it’s a business potential more than just a way to rationalize the networks.
David Meyer 17:28
That is spot-on time-wise, so Ulf, thank you very, very much.
Ulf Ewaldsson 17:29
All right, thank you very much. Thank you for having me.