Ericsson's Vestberg says mobile broadband is all about change
February 29, 2012 — 3:20pm ET
By Tammy Parker
BARCELONA, Spain—Hans Vestberg, CEO and president of Ericsson (NASDAQ:ERIC), highlighted multiple examples of our increasingly connected society in his keynote speech at the Mobile World Congress, but it was one of his guest speakers, Per Sundin, head of Universal Music Group in Sweden, who wowed the audience with his directive to "Embrace Change!"
First though, Vestberg told the audience that there are almost 1 billion mobile broadband users worldwide, and with 60% annual growth, that number will expand to 5 billion by 2016. Further, by 2020 there will be 50 billion connected devices, many of which will communicate automatically on behalf of their human owners.
"Our society will be changed. Our lives will be changed," Vestberg said.
He noted one example of how mobile broadband has permeated people's lives is this statistic: 40 percent of all smartphone owners use their handset before they even get out of bed in the morning.
The ongoing challenge to infrastructure providers is to improve and upgrade networks that were built for voice but are increasingly "used for something totally different," said Vestberg. He noted a study of U.S. smartphone users revealed that 74% of their smartphone interactions involve non-voice actions.
One of the first industries impacted by information and communication technology (ICT) was the music industry, which is why Sundin was invited to the stage.
Sundin said 2000 was the year of peak revenue for the music industry (other sources say 1999 was), but then came Napster, Kazaa, Pirate Bay and other digital music-sharing sites, which caused revenues from the sale of recorded music to plummet, particularly in Sweden, where extremely fast broadband services were widely deployed.
Speaking of music industry efforts to shut down music-sharing sites, Sundin said, "Instead of embracing change, we fought change."
In 2008, Universal Music joined a handful of other companies that handed over their music catalogs to Spotify, which delivers to computers and mobile phones free digital music to a point, at which it requires a subscription fee. "We joined the evolution," Sundin said, noting Spotify's revenues have been climbing. As an early advocate for digital music over the Internet, "I've changed from bad boy to poster boy for the music industry," Sundin said.
"We're going from a transaction business to a subscription business," said Sundin, and going from dollars to nickels and dimes. Nonetheless, the business model works, he said.
Sundin showed a chart that revealed the height of Spotify activity in Sweden is on the weekends, when people are home listing to music. However, the situation is reversed in the United States, where activity is heightened during the week because Americans apparently have much faster broadband connections at work and school rather than at home. That sort of information highlights the impact that fast broadband has on people's daily actions, he said.
Vestberg returned to the stage to tout Ericsson's deal with Akamai for the Mobile Cloud Accelerator, which Telkomsel in Indonesia recently deployed, getting 70 percent improvement in page loading time on the network. The MCA accelerates content delivery across the Internet and prioritizes premium content across the mobile network.
Vestberg predicted a major business opportunity lies in enabling enterprises to use such tools to change their businesses. He said collaboration and investment in the mobile broadband industry should be encouraged, "so the 5 billion mobile broadband users in the future are actually going to get superior performance."