Ericsson To Tread Cautiously In Services

Johan Bergendahl is about to take over marketing for a third dedicated group Ericsson has just added to its organization: global services. A telecommunication equipment manufacturer that centralizes services is hardly a novelty. Cisco Systems Inc. and Nortel Networks Inc. both have emphasized managed services among some segments of their customer bases. And when Cabletron Systems Inc. split into several segments a few years back, one of its spin-off companies was dedicated to services.

There is a careful line to tread, however. Lucent Technologies Inc., prior to its acquisition by Alcatel, devoted secure buildings on several continents to hosted services for carriers. Sun Microsystems Inc. even worked with Lucent to extend the business to enterprise and data center management.

Two kinds of outsourcing are at play here. "Hosted services" are fully outsourced carrier tasks, where the equipment manufacturer retains ownership of the hardware. "Managed services" involve an OEM or third party managing the operation of equipment, even though the carrier may own it.

For Ericsson, there is no strict mandate against offering either hosted or managed services. "You must always work on the service provider's behalf," said Bergendahl. "They will always be the one sending the bill to the customer or the enterprise."

While all companies love to talk about outsourcing, there is no need for an OEM to manage a well-characterized, mature network. The best place and time for an equipment vendor to get involved in managed services is when a network is making a transition--from first-generation soft switch to IP Multimedia Subsystems, for example.

Older soft-switch protocols, like H.323 and Megaco, don't disappear immediately, Bergendahl said. In reality, the shift can take years, he said, and this is where the experience of an equipment supplier can help a carrier upgrade its network to new protocols and topologies.