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Ericsson Sharpens Focus on $280 Billion Managed Service Market

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Managed services revenue down 3.0%

Ericsson (ERIC) will use artificial intelligence to power its new managed services solution aimed at communications service providers, the company announced recently. The global managed services market was worth $180.5 billion in 2018 and is poised to grow to $282 billion by 2023, according to estimates by Research and Markets.

Ericsson has created a new managed services solution at a time when the company is working to turn around its managed services business. Ericsson’s managed services revenue fell 3.0% in 2018.

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Chase for managed services dollars

Besides Ericsson, Nokia (NOK) and IBM (IBM) are the other companies pursuing the huge revenue opportunity in the managed services market. A year ago, Nokia announced winning a five-year managed services contract from Australian operator Optus. On January 17, IBM announced a $550 million multiyear managed services contract with Vodafone (VOD). Ericsson won more managed services business from Liberty Global (LBTYA) last year.

Ericsson sees strong demand for managed services

In bringing AI technology into its managed services offering, Ericsson is betting on increased demand for such solutions, as operators handle a growing volume of devices and work with multiple network technologies.

The arrival of 5G connectivity is expected to pave the way for more devices and equipment such as industrial machines to hook up to mobile networks. While that would enlarge the addressable market for mobile operators, it would also increase network complexity, raising the need for advanced managed services.

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