Sep 1, 2004
Ericsson is Not Walking Away From Bluetooth

Breaking news - Ericsson reorganizes its Bluetooth operations

Incisor, Issue 73, September 1st, 2004

In an announcement dated 26th of August, Ericsson has disclosed that it will discontinue its design and development of new Bluetooth
solutions for the semiconductor industry. Industry watchers will know that this is a very significant piece of news, and Incisor spoke to
Johan Åkesson, VP of marketing at Ericsson Technology Licensing (ETL) to discuss the implications.

More than any one other company, Ericsson is regarded as having invented the Bluetooth standard, which now is successfully established
worldwide. The standard has reached a mature state and Bluetooth products are being produced in large volumes. Along the way, ETL has secured a blue-chip customer base for its Bluetooth software solutions, including many of the world’s top semiconductor companies. However, even though large volumes of silicon are being manufactured, the business case for ETL to continue designing new Bluetooth solutions is apparently not strong enough.

Åkesson commented: “We succeeded in getting Bluetooth into mobile phones, which was one of Ericsson’s major goals, bringing as it does huge volume sales. The very success of Bluetooth, and its widespread market adoption have driven prices down, bringing intense competition
amongst software and hardware providers, and tough market conditions. From a strictly objective point of view, the business case to continue as we are today is not solid enough.”

Ericsson is not walking away from Bluetooth, Åkesson was keen to point out. A dedicated Bluetooth unit will be created to support ETL’s
existing high-profile customers. In addition, Bluetooth technology will be offered within the section of Ericsson’s business known as Ericsson Mobile Platforms (EMP), which provides platform technology to cellphone OEM and ODM customers including Sony Ericsson, Sharp, LG, Amoi, TCL, HTC, Lite-On and Bellwave amongst others.

Ericsson’s Bluetooth knowledge will be integrated into EMP, which will offer Bluetooth software as a part of its offering. “Adding this Bluetooth expertise will undoubtedly strengthen EMP’s position in the market,” said Åkesson.

ETL currently employs 125 staff. Much of ETL’s existing resource – human and IP will transfer into EMP. This, plus the establishment of the support team for ETL’s customers is expected to ensure that no Ericsson staff are laid off. Åkesson was very confident about this: “Both EMP and Sony Ericsson have big recruitment needs at the
moment, and so we are confident that they will find positions within these Ericsson organisations.”

What is more, Sony Ericsson, which seems to have been regathering strength in the handset market – grabbing sales from the currently
slipping Nokia – is committed to continuing to use Bluetooth software. A large part of Sony Ericsson’s product portfolio is Bluetooth-enabled.

Peter Bodor, public relations manager for Sony Ericsson confirmed this: “Bluetooth is a really integral part of Sony Ericsson’s strategy. We have three key applications areas – imaging, entertainment and connectivity. For the latter, Bluetooth is obviously paramount, but imaging and entertainment apps need connectivity too, and Bluetooth provides that.”

Nor will Ericsson pull back on its leading role in the Bluetooth Special Interest Group (BSIG). “Our commitment to driving Bluetooth forward via the BSIG’s activities will remain at the same high
level,” said Åkesson.

What will evolve from this series of changes within one of the Bluetooth industry’s most significant companies remains to be seen. At this point it is probably wisest to regard this announcement as a pragmatic and sensible reaction to changing market conditions.

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Last Published August 20, 2004

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