Infrastructure News: Ericsson's Q2, Alcatel-Lucent's mobile video lab

The shift from coverage to capacity in North America helped Ericsson to increase both revenues and margins during the second quarter. Second quarter sales were $8 billion, down 1% from the year-ago quarter, but up 15% from the first quarter. North American revenues were up 24% quarter-on-quarter.
Ericsson’s operating income was $580 million, and Ericsson’s operating margin shot up to 7.3%, a significant increase from last quarter’s 5.5% and last year’s 4.5%. Ericsson’s operating margins have increased for four consecutive quarters. The company said that the shift by many carriers to capacity projects led to higher margin sales, but that its margins were also boosted by internal initiatives.
“We spend so much time and energy to make it the best company, to make sure we become, quicker, lower cost, more efficient, do things in the right way. It is good to see that all these things are paying off in one way or the other,” said Ericsson head of networks Johan Wibergh.
Wibergh said research and development is one area in which the company has been able to cut costs by becoming more efficient. He said Ericsson has 80,000 employees in R&D, and that 80% of those people work on software development. Most of those people work in cross functional teams of seven or eight people.
“This is a very natural way of working if you’re a small company, but we are a … huge organization,” said Wibergh. “The challenge really is scaling this up, to make it work in high volumes. On top of that we have something called continuous integration, where all our software builds are automatically tested, continuously, so you can achieve very high quality and high efficiency. Things like that have made us produce more and more product with the same amount of money, or with less money.”
Alcatel-Lucent launches ‘antenna’ unit focused on video research
Alcatel-Lucent’s R&D group opened a new video research lab to focus on delivery of video from one mobile device to another. The Cambridge “antenna” office will research video delivery to all types of connected devices, such as smartphones, games consoles, tablets, smart TVs and more across Bell Labs.
The company’s CTO Marcus Weldon said mobile subscribers spend about 30% of their time on networks that rely primarily on mobile connections, as opposed to Wi-Fi networks that connect to fixed broadband. Alcatel-Lucent expects this trend to accelerate as more network video traffic is generated by users.
Verizon under fire from Netflix
Netflix has made no secret of the fact that it wants Verizon Communications to speed up delivery of its on-demand videos and to invest in infrastructure to continue to support video traffic on its networks. Now that Netflix is paying Verizon for direct interconnections, the content provider may be even less patient with network delays. In a filing this week responding the the Federal Communication Commission’s proposed net neutrality rules, Netflix took a jab at Verizon’s infrastructure investment.
“When an ISP like Verizon fails to upgrade interconnection points to its network, Netflix data enters the network at a drip-like pace, and consumers get a degraded experience despite already paying Verizon for more than enough bandwidth to enjoy high-quality online video services,” Netflix wrote in its filing. “There can be no doubt that Verizon owns and controls the interconnections that mediate how fast Netflix servers respond to a Verizon Internet access consumer’s request.”