[TorKlingberg]

I used to work for Ericsson R&D, so I am sad to see this, especially for my previous colleagues. There are some very sharp and dedicated engineers there.

At least this cut seems to mostly affect Managed Services. That is the division that basically manages telcos networks for them. It was a big growth area a couple of years ago, but turned out to be very low margin.

Ericssons fundamental problem is that their only customers are the telecom operators, and the telcos aren't going to invest in infrastructure unless they have to. 4G rollout is mostly done in developed nations, and 5G is just a buzzword at the moment. Even if Ericsson invents some amazing technology that improves the end users experience, it doesn't mean they will make much money from it.

Of course the price pressure from Chinese competitors has not helped, even if Ericsson has held on to its marketshare.

[pm90]

This is kinda distressing. I'm mostly all for free trade, but the impression I have is that Chinese competitors undercut Ericcson by not paying for patents. If that is the case, would it make sense to sanction those Chinese companies that do it, and thus take their products off the market in the developed countries? (Please correct me if my assumptions are wrong)

[thephyber]

I don't disagree with China playing fast and loose with IP, but those actions wouldn't happen in a vaccuum.

China has WTO trade laws that protect them until a court case makes the connection between intentional IP violations and the unfair trade competition. Even after that is established (which can take many years), China can assert a counter-action using WTO rules to find whatever trade laws those same western+developed countries are violating.

Steve Bannon just talked about this in an unscripted interview for a newspaper. If it happens, pain will ratchet up for everyone involved. It will take a decade or more for all of the ripples of this type of trade war to calm. Until then, ratcheting up of tariffs will make it far more expensive to live in any country involved.

[jamesblonde]

Huwawei opened a large office (about 1K workers) here in Kista beside Ericsson's global headquarters - obviously to pinch workers/IP. I can't imagine the Chinese tolerating Ericsson opening a large office beside Huwawei's HQ!

[Danihan]

Of course, and this is exactly why tariffs exist, to level the playing field.

Otherwise whatever country has the most lax regulation and labor laws wins.

[thephyber]

> Of course, and this is exactly why tariffs exist, to level the playing field.

Tariffs can be used for this purpose, but they traditionally weren't used to "level the playing field". They were traditionally used to benefit local goods over imported goods. The history of the US and England are rife with counterexamples of "level playing field" tariffs.

[stale2002]

Ehh, Erixxson's loss is the consumer's gain.

Patent law is far overreaching in both breadth and length. Anything that undercuts it is a good thing.

[pm90]

I agree patent laws are abused/overused (cough cough Qualcomm) but the solution is not to get rid of them altogether, but to reform them to make them more sensible.

In any case, I think right now Ericsson definitely needs to assume that Chinese will use their technology at some point and plan for that contingency.

[umbs]

I worked for Ericsson for 8 years in San Jose office. All your observations are accurate. I can't say about Ericsson's wireless products, but from IP networking, here are few more things:

1) Market & Competition: As mentioned in another thread below, Chinese competitors were severely undercutting us (there was constant threat from Huawei). One customer in middle east that I worked with comes to mind. We were developing a complex feature for them (Bridge Virtual Interface [BVI] over VRRP and few more protocols). 2-4 engineers in San Jose and 1-2 at customer site. Huawei had close to 200 engineers on site to address any issue. We just didn't stand a chance.

Chinese companies have huge advantage over West/European companies. Relatively inexpensive, high quality labor.

2) Commoditizing of IP Networking: Ericsson's investment in IP networking was a huge sunk cost. Traditional networking industry is getting commoditized. It's very inexpensive to make a whitebox switch covering good 90% use cases. Therefore, * Cisco's revenue of core networking products is on steady decline * Brocade is being broken up on to pieces and being sold * Juniper has been on market for sale (at least rumors) * Ericsson laid off pretty much everyone in Redback last year and partnered with Cisco in 2015. * Only Arista Networks is doing well.

It's very hard for networking companies to survive any more on core, edge or campus switching products alone.

3) Engineering vs Management: Ericsson brought management heavy style to workplace. It was very different to SV culture. In 2007, from concept to delivering a feature required writing 3 documents. By 2015, we had to write 6 documents. Feature velocity came to a crawl. Engineers clearly felt pulled back. Brilliant engineers, industry stalwarts, started leaving one by one.

3) Compensation: Ericsson's benefits was employee friendly, particularly for engineers with families. Decent work-life balance, good vacation policy, generous health insurance and 401K policy. The base pay was horrible. This is one of the reasons attracting young talent became hard. New college grads were getting offers in $120K-$140K range at other companies (heck, the summer intern I mentored got an offer more than my base pay :))

4) Culture: Slow to pivot. Cisco innovated the idea of spin-in/off to quickly develop products. But Ericsson (and others) took too long to change course. We were always playing catch up.

[toomuchtodo]

> At least this cut seems to mostly affect Managed Services. That is the division that basically manages telcos networks for them. It was a big growth area a couple of years ago, but turned out to be very low margin.

Is it possible these telcoms will hire some of these Ericsson Managed Services folks to run their networks? I mean, someone has to manage the network.

[heisenbit]

At least in theory these networks have become more efficient to manage. For example the fixed and mobile networks often share the same core these days. Also likely Ericsson had to promise efficiency gains when taking over the business. Last but not least as a network equipment provider Ericsson has more interest in managing the networks and maintaining a big footprint than making profit from doing so. Their core business is selling equipment.

[heisenbit]

There is only limited differentiation on the mobile services side thus the service providers are primarily in a price competition in most markets. In addition some are still merging although that has slowed a lot. As a result the network operators are not so eager to invest. I suspect 5G build out will be a lot slower and it seems Ericsson sees it the same way.