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From Snow to Silicon

Tue, 12/07/2010 - 11:21am

At an event in Silicon Valley last week designed to give international journalists a glimpse of Ericsson's accomplishments in North America, executives spent a good amount of time explaining their presence in Silicon Valley.

But it makes sense, doesn't it? As Chief Technology Officer Håkan Eriksson noted, the epicenter for devices has shifted from Europe to Silicon Valley. Apple and Google are driving fantastic growth for iOS and Android, two operating systems that many of Ericsson's customers are deploying. It should be noted that handset maker Sony Ericsson, a 50-50 joint venture between Sony and Ericsson, also is churning out a lot of Android-based devices.

It also should be noted that Eriksson moved his family from Sweden to Silicon Valley nearly one year ago. When I first met Eriksson, he was still in Sweden. It was early in this decade, during a trip hosted by the Invest in Sweden agency, which brought journalists from mostly Europe and a few from the United States to the chilly land of Lapland, 200 kilometers north of the Arctic Circle. Part of the purpose of the trip, besides exploring the Ice Hotel – an actual hotel built of ice and snow – was to see the impact of wireless and other technology in far-flung regions of Sweden. Did I mention this trip was in January? And that we traveled via dog sleds from the airport to the Ice Hotel? Dark and bitterly cold pretty much sums up the climate.

That was a long way from the palm trees of Silicon Valley, and a lot has changed in just the last few years. When I took that trip to Lapland, Nokia of Finland and Ericsson of Sweden were still fairly intense rivals. Now, of course, the big wars, for lack of a better word, have shifted from Europe to Silicon Valley, where Apple and Google/Android rose from zero market share to the fastest growing.

Ericsson's expansion in Silicon Valley started with the acquisitions of Redback and Entrisphere in 2007. Its four buildings there are now home to about 1,300 employees. In all of North America, Ericsson employs about 14,000, and it has field personnel in every state in the U.S. In Sweden, Ericsson employs 19,000, and worldwide, the workforce totals nearly 90,000. So, I suppose Ericsson President and CEO Hans Vestberg can pretty much pick and choose where he wants to be based. (Scratch that. The Invest in Sweden agency probably wouldn't go for that.)

Back to the Valley, Eriksson the CTO explained that a big reason for Ericsson the company to be in Silicon Valley is proximity to partners. Besides Intel, HP, Oracle and Juniper Networks, Ericsson does business with a vast number of companies in the area. Gone are the days when Ericsson tried to do everything on its own. Eriksson describes a time when Ericsson had a machine on site in Sweden to make the screws that went into its base stations. Sounds extreme, but it shows just how "control-minded" the company must have been in its history. Now, of course, it outsources those screws.

While Ericsson often talks about 50 billion connected devices by 2020, it's also working with operators and others in the value chain to make sure they stay relevant in the future. The same goes for Ericsson itself. It's done a good job of adding to its services portfolio, so it's not just supplying equipment but managing services as well.

Still, some of the discussion seems pretty pie-in-the-sky to me. Encouraging operators to look for ways to reap the benefits of over-the-top services is commendable, but in a lot of instances, I'm not sure how you can separate the net neutrality debate from the notion of offering a better class of service to some entities that will pay more for it. Eriksson says it's like a toll road – people pay to drive on a road that gets them to work faster. That makes sense. I'm just not sure how you convince the net neutrality supporters – many based in Silicon Valley – of that and get operators to move from exploration to actual deployment of new business models.

Overall, Ericsson's presence in Silicon Valley can only help the wireless industry. If more application developers from the wired Web world can better understand the dynamics of mobile networks and their limitations, the better the mobile applications. I'm sure that at times the climate feels as harsh, figuratively speaking, as the Arctic Circle. But, hey, that's what the Valley is for, right – thinking big? A few years ago, right next to the Ice Hotel, I saw people operating machines that moved big blocks of ice to create an ice replica of Shakespeare's Globe Theater in London. This year, I hear the Ice Hotel opened a month earlier than usual, with an inauguration to be staged on Dec. 10. It's still in business, and it's finding ways to extend its life. If that's not thinking big, I don't know what is.

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