1. Company overview
Based on the recent announcement
by Ericsson CEO, Ericsson business would be in good performance by 2020, and
2018 is also a turbulence period.
It depends on the market or many
big investors out there when they decided in jump in: early and wait OR at time
Ericsson's business improved. So ERIC will be fluctuating a lot before 2020.
2. Stock market situation
Currently Ericsson was downgraded
by several stock analysts, i.e. many investors sold Ericsson stock. I have
bought some shares and waited until 2020. The reason was simple, they sold
shares to make Ericsson undervalued.
Morning star research report
estimated Ericsson's fair value was $7/share in July 2017.
3. Ericsson products, APY
Based on voices that I have heard
in the past years, Ericsson's APY is a good/reliable product, which is used by
government for packet analyzer. This is a next generation from APZ to support
relational database.
With relational database and PLEX
language, development of new features would be faster. Debugging would be
easier, too. Therefore development costs will be lower. Of course, R&D
would be require to "migrate old software product" or developing new
products on this APY platform.
APY is powerful and scale-able
products supporting multiple processor boards, i.e. less processing demand
products would use fewer processor boards to make product cheaper.
Ericsson could invest in R&D
to convert current products such as MSC, HLR, etc. from APZ to APY. Of course,
it depends on exiting sale numbers of those products as those network
components may be matured. If those didn't require to be upgraded with a lot of
new features, then it wouldn't be cost savings or worth to migrade those to APY
platform.
Ericsson should convert RBS to
APY platform with 2 processor boards (executive-standby modes), because 5G is
coming and it'd be development savings in future software upgrades.
4. Ericsson-Microsoft EMS and RAN
EMS server seems to be powerful
and also scale-able. This server could also be used in server business, i.e.
sold to commercial sectors. This EMS also supports programing language like
PLEX and relational database.
* I heard that some government
agencies also use EMS, i.e. good/reliable product.
RAN sale is weak or cannot cover
costs of RAN development? I don't have sale numbers.
Ericsson have 2 options:
* Incorporate RAN into RBS (APY)
as the RBS must have extra processing power with 2 processor boards. Having 2
components in a node would lower product cost.
* Implement RAN in EMS server.
Ericsson have shares in the business, i.e. using EMS would bring back some
profits to Ericsson via partnership. This way RAN could be sold separately.
5. APY versus APZ
During my working years at
Ericsson, customers didn't like APZ for 2 reasons, i.e. technology of the 1970
and man machine interface. APZ didn't offer GUI as other competitors. APZ was
invented in 1970, I guess. APZ is reliable, but it's expensive.
APY is newer generation with
relational database. It also offers Ethernet connection, i.e. a node like EMS
server could be connected to APY to support GUI interface. APY was selected for
some important government tasks, i.e. advanced technology and reliable.
I heard that costs of APY is
relative low, due to some improvement in hardware and operating system's
design, even though it's more powerful. Application/system development cost
should also be lower. Therefore its products could be sold at lower prices to
customers.
In brief, APY has resolved issues
of APZ for Ericsson's key customers.
6. EMS server
We can think of EMS server in the
server market like Windows Server 2016 sold by Microsoft.
The difference of EMS server is
operating system and hardware.
* It supports parallel processors
* Users could add more processors
board(s) to the server to add extra processing power
* The operating system is
overhaul similar to APY to support parallel and multi-task processing.
* It offers programming
language(s) to create GUI software applications.
It does not support
fault-tolerance like an APY with 2 processor nodes running as an executive and
a standby side.
Users could use current
technology to connect 2 EMS servers as a network to provide fault tolerance,
mirror, etc.
It is less expensive than an APY,
but its market is larger. There would be a lot of small and mid-size business
wanted a couple of EMS servers for their daily operations.
With PLEX-like programming
language and relational database, a simple version of packet analyzer could be
easily implemented to provide better security of a computer network.
7. PLEX and relational database
After years of working in
software development, I found out that PLEX and relational database helps
developers to implement and understand a large/complex application easily and
quickly.
Speaking of APZ with PLEX-C and
TEST SYSTEM, developers could use test system to get a full picture of data
flow in an application easily. Therefore tracing a bug would be quick as well
as learning a complex application.
With current popular programming
languages like Java, C++, C#, etc. developers could turn an application in
debugging mode, but following those steps and reading codes would be harder.
It's easy to get lost in piles of programs or classes.
With relational database similar
to MS SQL or Oracle database, developers could view data saved in a database
easily. It would help in development and debugging of an application.
PLEX is unique with its assembly
codes. Trouble shooter could load patches written in assembly codes, and then
load those patches on a live node to fix an issue, i.e. doesn't need to
recompile an application in the back office, and the deploy later (at least a
week required for this process). Bugs could be fixed quickly in 15 minutes.
8. Microsoft (MSFT) vs. Ericsson
(ERIC)
If we compared the financial
performance between MSFT and ERIC due to the upcoming products, i.e. Windows
12, EMS server, and APY respectively, we would say that investment in MSFT
would be a better option.
Microsoft could sell hundreds of
millions copies of Windows 12 for laptop and Windows phones, because Windows 12
also supports parallel processors, i.e. like a super computer. A Windows 12
phone coupled with 2 Intel i5 processors could outperform an iPhone equipped
with an expensive i7 processor, i.e. the Windows phone should be less
expensive, but it could offer mobile router features as well as intensive
processing demand's applications as compared to an iPhone.
EMS server is product of a 50-50
partnership between Ericsson and Microsoft, thus profits would be split even
between them.
APY's market is smaller for
telecom equipment such as switches, radio base stations. Packet analyzer's
market is very limited to government's agencies. Usually companies don't make
lots of profits by selling their products to governments, and governments don't
need a lot of packet analyzers.
The only difference between MSFT
and ERIC is their current market capitals. MSFT is worth USD $641.23B, and ERIC
is worth USD $21.08B.
Can MSFT have USD $2T market
valuation? Is USD like printer paper?
ERIC could be traded at USD $60B
or USD $100B. It still sounds reasonable if they're doing well.
Cisco (CSCO) is traded at USD
$180.49B.
Source: https://finance.yahoo.com/news/ericsson-eric-restructuring-track-weak-155203225.html
* December 31, 2017: Simple
version of a packet analyzer would focus on defending intruders into a private
network OR unauthorized data being pulled out by malwares. Basically the
simplified packet analyzer protects a private network or private property.
Only authorized government's
offices could implement a full version of packet analyzer to monitor
communications via phones, Internet, etc. to track down criminals and
terrorists.
There is also a treaty among many
nations involved the use of packet analyzer, thus you shouldn't try to go
beyond your private property.
* Why Ericsson will be
fluctuating significantly before 2020?
I guess, high R&D spending to
convert products to APY platform, and relatively low revenues during those
years would make investors unhappy. Investors would sell shares. More downgrade
coming?
* Many operators or an article
said that wireless operators didn't get more profits by offering 4G. They still
have extra capacity. So, they're not preparing to go for 5G and didn't have
lots of cash to do so.
The application would kill 4G
capacity would be "mobile router". Windows 12 phone could offer this
feature with parallel processors. Because this is like a router, it would
require powerful processing phones.
Look at the scenarios for use of
mobile routers:
- A minivan travelling with 2
adults and 6 kids. It's likely that there are 2 mobile phones with 6 tablets
connecting to wireless Internet playing games. It'd use more wireless data
bandwidth.
- A bus equipped with a mobile
phone providing wireless (WiFi) Internet to all 30 passengers. The driver's
phone could also be used for emergency calls.
- Camping with laptops and
tablets connecting to mobile routers. They may even play games with console
like X-box.
- Picnics with laptop and
tablets.
- Travelers using laptop or
tablets in hotels.
- If a passenger train offers
mobile routers, it'd be one mobile router per car. The phone could also be used
for emergency cases.
At home, single people may use
only mobile router to save landline Internet bills.
Family would still use landline
Internet for faster transmission rates.
* 2017-12-14: Ericsson was
selected by Deutsche Telecom and Verizon for 5G equipment.
https://www.ericsson.com/en/press-releases/2017/12/deutsche-telekom-selects-ericsson-for-5g-ready-network?lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3B52iyBadVSxOsRI%2BYxzsegQ%3D%3D
*January 4, 2018: Can you upgrade
your network from 3G to 5G directly? I think that it's technically possible.
* In the past network operators
did change the vendors, it was possible.
* Ericsson could upgrade their
nodes from 3G to 4G and then 5G using DCI tool. They could do a special script
to upgrade 3G node to 5G node directly. Ericsson staff should be able to answer
this question.
The only question would be
pricing. It should be less expensive than upgrading 3G network to 4G networks,
and then 5G network a few years later.
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