Interview: Ericsson chief Hans Vestberg - The smartphone revolution is going to be televised

Networking boss predicts hi-tech leap for cities to cope with population crush

Vestberg took over as chief executive when Carl-Henric Svanberg quit to be chairman of BP Photo: Paul Dallimore

Paul Dallimore

30 May 2014

Think London is crowded today? Just wait until 2050. By then, Hans Vestberg says, up to 75% of Earth’s population will be living in big cities.

“You cannot have three times as many cars or three times as many buses,” says the chief executive of mobile networks giant Ericsson. “You need a much more efficient way to live.”

Imagine a city where the parking meters are internet-enabled so motorists don’t have to circle endlessly to find a free bay.

In the week that Google announced plans to produce a fleet of prototype driverless vehicles without steering wheels or pedals, Vestberg shares the vision of cars that will be connected too: “So you know that if you brake, the one behind you will brake as well.”

Of course, all this technology needs to be networked, which is where Ericsson comes in. The Swedish giant already provides the kit — base stations, routers, masts — that carries 40% of the world’s mobile traffic, with operations in 180 countries, more than 110,000 staff and annual sales of £20 billion.

But Vestberg — tall, with neatly slicked, sandy hair — has designs on more. 4G might seem like the new technology kid on the block, but Ericsson is investing a large chunk of its £3 billion-a-year research and development budget into 5G, even though it won’t yield any income until the next decade. Vestberg says that 5G is destined to have a big impact on cities such as London.

It will satisfy applications that need extremely high speeds for processing data in real-time but also demand low power consumption.

By that point, Ericsson is betting on the continued trend for phones being used for anything other than making phone calls. Apple wants its handsets to become remote controls for the home, managing lighting and alarm systems.

On top of text messages, email and photos, Ericsson is tuning into television. The internet has already collapsed into telecoms, with Facebook and Twitter leaping from personal computers to smartphones. Broadcasting is next.

It explains Vestberg’s interest in touring the studios of London Live, the capital’s TV station and sister company of the Evening Standard. Ericsson’s broadcasting arm has a five-year contract to provide the technology that plays out the channel on terrestrial, cable and satellite TV as well as online and mobile.

“Our take was that if we are going to support our customers we have to help them with video distribution whether that is iPad, TV, small screen or large screen,” he says in a strong sing-song accent, slapping me on the back as we peek into the studio.

“We want to be number one from the ingestion of content to the play-out to any type of channel. Everything between there you should see Ericsson, if you are a broadcaster, telecoms operator, or cable operator.”

To further the cause, Ericsson has just closed the acquisition of Red Bee Media, the London-based firm, once part of the BBC. After previously acquiring a chunk of British telecoms kit-maker Marconi, it means Ericsson now has more than 5000 staff in Britain. The new addition provides broadcasters such as BT Sport with channel play-out, video publishing and subtitling.

“It comes with a lot of technical skills and some extremely good engineers who know how you build these platforms,” says Vestberg, 48, looking trendy in open-collared shirt, jacket with thin lapels, pocket hankie and brown shoes.

“It can be on-demand, it can be linear, but basically consumers want choices. That has changed in 10 years. The new generation doesn’t even know when they are going to show some things on TV.”

Vestberg’s only appointment to view is handball, similar to basketball but with goals and goalkeepers, that is popular in Scandinavia. He used to play a bit, and much prefers it to ice hockey, where all the best Swedish players quit for the big bucks of the National Hockey League in North America.

In fact, Vestberg was playing handball in his hometown of Hudiksvall, a three-hour drive north of Stockholm, when he joined Ericsson.

“I was taking a break from university so I could play handball full-time for a year. Then I said I wanted to do something in the mornings. The sports club helped me to get a job there.”

Vestberg processed travel expenses and trained in the afternoon, before resuming university study and going back to Ericsson after graduating.

Seven countries and 23 years later, Vestberg is still on the move. He took over as chief executive when Carl-Henric Svanberg quit to be chairman of BP, becoming Ericsson’s 17th boss and its first leader without an engineering background.

Now he spends five working days a month in Sweden, but tries to observe a rule that he is always back to see his family on Friday evening at 6pm. “And then I travel out on Sunday evening at the earliest.”

There is no suggesting the job will get less demanding. By 2019, 90% of the world will have mobile coverage. In places like Africa, where infrastructure is poor, it means millions will watch TV without actually owning a set in the corner of the room.

Ericsson — whose chairman, Leif Johansson, also chairs drug-maker AstraZeneca where he recently staved off a £69 billion bid from Pfizer — faces stiff competition in the form of Chinese telecoms equipment-maker Huawei.

The company’s media-shy founder, Ren Zhengfei, recently broke his silence to forecast that its revenues could double in five years, to as much as $80 billion (£47.9 billion) by 2018. Huawei is also the number three smartphone-maker behind Apple and Samsung, whereas Ericsson gave up on handsets several years ago.

“They have done a great job in a short time,” says Vestberg, estimating about half of his business competes with theirs. “We are just defending our number one position and we have no plans to leave that position.” For some of its services, Ericsson sees IBM and Hewlett-Packard and Cisco as rivals.

Compared with the early days of 3G, when mobile phone firms pushed the technology but consumers didn’t come running, 4G is being driven by customer appetite. Japan, Korea and the US are leading the charge. Finishing his latte, Vestberg is intent on keeping up with demand — as well as hunting for new areas to expand into after broadcasting.

“For us it is very important all the time that our core business is really good but that we don’t stop moving,” he says. “In the past 20 years we have built our networks; the next 20 is really when they are going to change a lot. We are just at the inflexion point.”

LIFE AND TIMES

CV milestones

1991 Ericsson accountant

1992 Asia, Africa and Latin America financial analyst

1994 Chile financial director, leading to various finance roles in Brazil and US

2002 Mexico chief executive

2003 senior vice president and head of global services

2007 finance director

2010 chief executive

Personal life

Married with a son and daughter. Relaxes by running, cycling, climbing mountains. Chairman of the Swedish Handball Federation.

Best advice I've ever received

“I have had a lot of great managers through my career and I’ve learned from all of them but I’m not sure I have got anything specific.”

Interview: Ericsson chief Hans Vestberg - The smartphone revolution is going to be televised

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LIFE AND TIMES