Ericsson Gets Serious About Services, LTE Divisions

Ericsson (ERIC), the world’s largest telecom equipment maker, has named new leaders in two of its key divisions.

Magnus Mandersson has taken over as head of the Global Services business unit and put Rima Qureshi in charge of the CDMA Mobile Systems arm.

Mandersson now oversees 40,000 employees tackling managed services, systems integration and consulting. Services marks one of Ericsson’s fastest-growing segments – in the first nine months of 2009, revenue grew 20 percent, the company said.

Qureshi, meanwhile, is operating the division that mushroomed after Ericsson won Nortel Networks’ CDMA and LTE assets at auction last July. She’s responsible for 2,500 workers in China and North America.

The two units have become increasingly important to Ericsson, although it can be argued LTE holds the most promise. Around the world, operators either are upgrading to, or deploying for the first time, 4G networks. In fact, Ericsson just dealt China-based rival Huawei a big blow when it landed a major contract with Norway’s TeliaSonera. Huawei helped TeliaSonera launch its commercial LTE services last year so it seemed a shoe-in for additional business. But analysts think Huawei priced its bid too low in 2009 and couldn’t afford to cut its margins any deeper.

Indeed, gear makers worldwide have had to fight hard against Huawei over the past couple of years. The privately held company has gone from a low-cost, low-profile, bottom-of-the-heap contender to top dog over the past year, thanks to an economy that’s pushed service providers to upgrade their networks only as needed, and for as little money as possible. It hasn’t hurt that Huawei’s rivals haven’t withstood the global financial stress very well, either. As a result, Huawei says contract sales will rise to $36 billion this year, up from $30 billion in 2009, adding that last year’s revenue surpassed 2008’s despite the worldwide recession.

But Ericsson seems to be prepping itself for battle. Fresh off the TeliaSonera win, and now with the appointments of Qureshi, the company expects big strides in North America, a market where Huawei still is trying to gain a solid foothold.

That’s not to minimize the strategy Ericsson is pursuing in the services sector. The company has spent the past several years bulking up its holdings in this area; the latest such deal came on Jan. 12 when Ericsson bought Italy-headquartered consultancy Pride for its billing and customer relationship management assets.