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Navigating in a Sea of Connectivity
Jaison JustinPranav KhannaOrlando O’NeillRobert Schwartz
NOTE:This presentation was created by a team
of MBA students for educational purposes and in no way reflects the
views and beliefs of Ericsson.
Within ten years there will be 50 billion connected devices…
Your life in a connected world
In the carAt home At the mall
At home
Your life in a connected world
In the car
Your life in a connected world
At the mall
Your life in a connected world
Current flat fee pricing model does not incent network investments
Different standards across devices/platforms impede interoperability
Return on investment for technology providers is unclear
Ericsson orchestrates a networked ecosystem through partnerships with all key players and is the gateway to information flow
Impediments to a connected world
Partner incentives
Standards/Integration
Technology Limitations
Virtually integrated value network
Complementors
Suppliers
• Raw material providers• Outsourced manufacturers
• Telco operators• Healthcare professionals• Utilities• Cities• Retailers
• App developers• Social media• Device manufacturers• Content providers
• Competitors• Standards setting bodies• Industry consortia
Channel Partners
Collaborators
How does Ericsson capture value?
Ericsson enables each layer of the connected world
Global NetworkInfrastructure
Integration Platform
Apps
Application business models will require a paradigm shift
Per Use - High Fee Subscription – High Fee
Per use – Low Fee
Intermittent Use Always On
Low Data Use
HighData Use
End User
$
App Developer
$
Carrier
Economic cost of broadband usage must be born by the applications themselves
Pacemaker
Subscription – Low Fee
Video on Demand
Video Broadcasting
Telematics
eReader
Open Interconnectivity Standard
Broadband Modules
Ericsson enables connectivity through its integration platform expertise
$• Connectivity implementation professional services• Broadband module sales
Integration Platform
Ericsson licenses the underlying network infrastructure
Operator Owned Network Model
$
Equipment ExpendituresSoftware LicensesSupport Fees
Network OperationsMaintenance & UpkeepTower Build & Optimization
$
Managed Service Model
$
Equipment ExpendituresSoftware LicensesSupport FeesNetwork OperationsMaintenance & UpkeepTower Build & Optimization
$ $
The proposed value network removes major obstacles to the connected world
• Customized pricing by nature of usage
• Ericsson drives industry to common standards
• New technologies find bigger markets
Current flat fee pricing model does not incent network investments
Different standards across devices/platforms impede interoperability
Return on investment for technology providers is unclear
Partner incentives
Standards/Integration
Technology Limitations
Value Network Solution
How should value be shared with partners?
Who gets to be the “Orchestrator”?
Who is accountable to the customer?
Ericsson should focus on growing the pie vs. maximizing its share
Ericsson uniquely placed due to its position as leading global network provider
Explicit commitment for accountability within value network
New challenges to be addressed in a connected world
Tremendous financial impact for Ericsson in getting this right
Sector Choice
• Mobile Communication
• Healthcare
• Energy
Potential to reach $100B in revenues by 2020
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 -
20
40
60
80
100 Smart Grid
Healthcare
Communications
Ericsson Revenues by Sector$B
Implementation timeline
Sectors
Mobile Communication
Test market in Japan
Rollout in NA & Europe
Broad Rollout in APAC/Lat. Am.
Healthcare
Test mobile healthcare in India
Rollout in China
Rollout in Africa/other parts of APAC
Energy
Test market in France
Rollout in rest of NA/Europe
Rollout in APAC/LatAm
2010201920182017201620152014201320122011
2011-2020
1 doctor for every 1700 people1
42% of births attended by a skilled healthcare professional2
700 million people have no access to specialist healthcare2
Source
Healthcare in India: a grim story
1 NationMaster2 World Health Organization
Mobile Diagnostics
Cloud Processing
Remote Doctor
Patient
Data
Proce
ssin
g
Reports
Diagnostics
Trea
tmen
t
Solution for dealing with healthcare inequities
Complementors
Suppliers
• Direct material suppliers
• Operator e.g. Airtel• Healthcare professionals
• Govt. – Ministry of Health• Non-profit organizations• Diagnostic equipment
providers• Telesurgery solutions
providers
• Standards setting bodies• Industry Consortia
Channel Partners
Collaborators
Mobile healthcare delivery value network
Business models in mobile healthcare delivery
Global NetworkInfrastructure
Integration Platform
Apps
Monetization mechanisms
Ericsson captures value through:• Broadband modules for
networked devices• Licensing fee from Airtel
Airtel charges usage/subscription fees to diagnostics providers
App. Developers charge end users i.e. Govt., Insurance or Indivual
2010 2011 2012 2013 2014 20150
20
40
60
80
100
120
140
160
Healthcare market
Mobile healthcare
Indian healthcare market size
$8.6
$5.4
$3.2
$2.2
$2.2 Ericsson
Airtel
Device Manufacturers
Solution Providers
Healthcare Providers
Value-share among ecosystem players
• $2B opportunity each for Ericsson & Airtel• CapEx outlay offset by government subsidies & licensing revenues• Significant social impact, catalyst for worldwide rollout
This application has a revenue potential of $2B for Ericsson by 2015
$B
Within ten years there will be 50 billion connected devices… enabled by Ericsson
Ericsson
Carriers
App Ecosystem
Appendix: Financial model for revenue projections
Existing BusinessNetworked communications
Healthcare Energy
Sectors
Existing BusinessNetworked
communicationsHealthcare
Market size & trajectory (based on research reports)
Share of new networked model (benchmarked with similar business model shifts)
Ericsson’s value-share within new model(benchmarked with similar value-creation models)
Consolidated Revenues
