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Earnings

Ericsson earnings: 5G will save us

Ericsson
  • Q1 revenue: 49.8 billion SEK (~$4.94 billion) (+2% YoY, -25% QoQ, vs. $5.54 billion expected)
  • Q1 earnings: 2.3 billion SEK (~$0.23 billion) (-5% YoY, -49% QoQ)
  • Q2 guidance: Financial targets for 2020 and 2022 unchanged, likely some softness in Q2 2020.

The big number: Even with the spread of COVID-19, Ericsson's earnings were surprisingly resilient. President and CEO Börje Ekholm said that the company's improvement in its gross margin was a strong indicator of how well its current strategy is working. Its margin was up to 39.8% (from 38.4% in the same period last year.)

People are talking: "We expect our industry to show resilience throughout the pandemic and we are well positioned with a competitive 5G product offering and cost structure," Ekholm wrote.

Opportunities: According to Ericsson, the current pandemic has shown just how vital telecommunications infrastructure is. The company was already one of the few major non-Chinese players in 5G hardware and said that it's signed contracts with leading network operators that will "start generating material revenues" in 2021, with the company adding that it expects increased investment in 5G infrastructure in North America in the second half of this year. "With current visibility we have no reason to change our financial targets for 2020 and 2022," Ekholm wrote.

Threats: While the long-term future may still look bright, things will likely be rocky in the next quarter. Ekholm said that the second quarter may be "a tad softer" than normal given the uncertainty that COVID-19 has sown around the world. He added that while the company's own business is generally operating well under a remote-work order, it's possible that the longer the restrictions on movement carry on in countries around the world, the more likely it will be that there are disruptions to Ericsson's supply chains.

"The current global uncertainty requires a humble attitude towards predicting the near-term future," Ekholm wrote.

The power struggle: Ericsson's long-term growth hinges on its ability to continue selling 5G hardware. It's making strides in some regions, but others are lagging. "We are concerned that 5G investments in Europe are delayed," Ekholm wrote, "This means that Europe may fall behind on a critical digital infrastructure for the future."

Ekholm added that he believes governments should encourage investment in 5G as a way to restart their economies — but that may prove more challenging in some European countries than others.

App store laws, Microsoft AR and Square buys Tidal

Welcome to this weekend's Source Code podcast.

Cole Burston/Bloomberg

This week on the Source Code podcast: First, an update on Google's user-tracking change. Then, Ben Pimentel joins the show to discuss Square buying Tidal, and what it means for the fintech and music worlds. Later, Emily Birnbaum explains the bill moving through the Arizona legislature that has Google and Apple worried about the future of app stores. And finally, Janko Roettgers discusses Microsoft Mesh, the state of AR and VR headsets, and when we're all going to be doing meetings as holograms.

For more on the topics in this episode:

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Sponsored Content

The future of computing at the edge: an interview with Intel’s Tom Lantzsch

An interview with Tom Lantzsch, SVP and GM, Internet of Things Group at Intel

An interview with Tom Lantzsch

Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corporation

Edge computing had been on the rise in the last 18 months – and accelerated amid the need for new applications to solve challenges created by the Covid-19 pandemic. Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., thinks there are more innovations to come – and wants technology leaders to think equally about data and the algorithms as critical differentiators.

In his role at Intel, Lantzsch leads the worldwide group of solutions architects across IoT market segments, including retail, banking, hospitality, education, industrial, transportation, smart cities and healthcare. And he's seen first-hand how artificial intelligence run at the edge can have a big impact on customers' success.

Protocol sat down with Lantzsch to talk about the challenges faced by companies seeking to move from the cloud to the edge; some of the surprising ways that Intel has found to help customers and the next big breakthrough in this space.

What are the biggest trends you are seeing with edge computing and IoT?

A few years ago, there was a notion that the edge was going to be a simplistic model, where we were going to have everything connected up into the cloud and all the compute was going to happen in the cloud. At Intel, we had a bit of a contrarian view. We thought much of the interesting compute was going to happen closer to where data was created. And we believed, at that time, that camera technology was going to be the driving force – that just the sheer amount of content that was created would be overwhelming to ship to the cloud – so we'd have to do compute at the edge. A few years later – that hypothesis is in action and we're seeing edge compute happen in a big way.

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Saul Hudson
Saul Hudson has a deep knowledge of creating brand voice identity, especially in understanding and targeting messages in cutting-edge technologies. He enjoys commissioning, editing, writing, and business development, in helping companies to build passionate audiences and accelerate their growth. Hudson has reported from more than 30 countries, from war zones to boardrooms to presidential palaces. He has led multinational, multi-lingual teams and managed operations for hundreds of journalists. Hudson is a Managing Partner at Angle42, a strategic communications consultancy.
Politics

What the Biden administration can learn from Ajit Pai’s FCC

The Biden administration's goals for internet infrastructure would be best pursued using economic incentives rather than heavy-handed directives, argues Douglas Holtz-Eakin.

FCC chairman Ajit Pai gave the private sector plenty of latitude. Will that continue under the Biden administration after Pai steps down?

Photo: Chip Somodevilla/Getty Images

As Federal Communications Commission Chairman Ajit Pai prepares to step down on Jan. 20, there are more than a few lessons the incoming Biden administration could learn from his tenure at the agency. Perhaps the most important lesson is that each of the new administration's goals for internet infrastructure — bridging the digital divide, universal broadband, rapid deployment of 5G — is best pursued using a regulatory approach that emphasizes economic incentives over heavy-handed directives.

Since March 1, internet usage has increased by roughly 30%, yet our networks have not buckled under pandemic-era pressures. Unlike much of Europe, we have not seen our access or speeds limited. This level of resilience is no accident. Under Pai, the private sector has had the appropriate incentives and latitude to do what it does best: invest in opportunity and innovate. The regulatory strategy and decisions got us to where we are today.

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Douglas Holtz-Eakin
Douglas Holtz-Eakin (@djheakin) is president of the American Action Forum and former director of the Congressional Budget Office.
Transforming 2021

Blockchain, QR codes and your phone: the race to build vaccine passports

Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.

One day, you might not need to carry that physical passport around, either.

Photo: CommonPass

There will come a time, hopefully in the near future, when you'll feel comfortable getting on a plane again. You might even stop at the lounge at the airport, head to the regional office when you land and maybe even see a concert that evening. This seemingly distant reality will depend upon vaccine rollouts continuing on schedule, an open-sourced digital verification system and, amazingly, the blockchain.

Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Power

Why this year’s iPhone launch matters more than most for Apple

Tuesday could be a big moment for Apple One, 5G, AR and more. Or it could highlight the tech industry's biggest problems.

In the midst of so much technological change and economic uncertainty, the iPhone 12 will hit the market at a complicated moment.

Photo: David Paul Morris/Bloomberg via Getty Images

On Tuesday, Apple will announce a new iPhone. This is not news: Apple has announced a new iPhone every fall for more than a decade.

But something's different about this year's launch.

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

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