Status Update

May 27, 2020

Hello, and welcome to Ericsson's Conference Call. Stefan Jelvin will now open up the call. Please go ahead. Thank you, Nath, and welcome everyone to today's call. It is the first in a series of calls where our business area help will present current topic, new contracts or other interesting news and development. The format is straightforward. We plan for a 45 minute session and more or less fifty-fifty between presentation and Q and A. Today is the first call in this series, and it is my pleasure to introduce Oza Samson, the Head of Business Area Technology and New Businesses. Orza, please go ahead. The stage and screen are yours. Thank you. Thank you, Stefan, and nice to meet you all. Thank you all for joining this session. So what I would like to do today is to share a quick business update on Business Theratechnologies and new businesses. I will go through our focus, the latest progress on the portfolio and businesses and priorities ahead. Let me start by setting context. I think you've seen this before. We are as a company, we contemplate where we have both stability and profitability in our on mute, because there's some background noise. But we're, of course, also investing now in growth in our core business. And we've seen over the last year stronger growth than I think we have done historically as a company for a long, long time. We also continue to accelerate our growth efforts in new areas, so areas outside of our core business. And here, it's really the focus of the business Air Technologies and New Business. Our mission is really to support the company and identify and developing and accelerating new growth. But it's not any growth. It's really growth that are building on the strengths we have in 5 gs and IoT and the related underlying trends. And we are focused on making our primary customers, the service providers, succeed in new value validate and scale the idea. And if we look then at their current tests, they are centered on a couple of areas where we see big relevance of our technology, but also strong fundamental and and data insights. I've been thinking quite a lot about a disciplined lean start up approach to growth. And what does that mean? Well, it means that we follow what we call a 5 I process. It starts from initiation through addition, incubation. And once we have a validated offering that we believe has the potential to scale, it can go into ignition and then further into incorporation. This is also how we have structured the portfolio. So we have a unit called Ericsson 1, which is really the platform for identifying and generating ideas. And here we are trying to focus on ideas that are in line with our strategy and that can help our businesses to address big and growing markets in transformation, such as transportation, Industry 4.0, etcetera. Once and here we really want to keep because with the smaller investments stimulate ideas. For instance, we have a tool here called ID Draft where we over the last 12 months, generated more than 1,000 ideas just from our employees alone. We're also working with universities customers and other partners to generate ideas. We're focusing ideas in areas where we want to make a dent. And in the next phase, we typically have pressure test, is there a real problem? And here, we try to limit the investment as much as we can upfront to really validate, is this a real problem or if it's a problem that we would love to solve. And that is here, we typically spend 4 to 8 weeks to do that through a rapid process type and very limited investment. We're then going to what we call incubation. And this is basically building an NBT, and we do call the NBT in 2 phases. 1 is NBT that basically answers the question, can it be done? This is a phase of the 4 to 6 months where we typically have maximum $300,000 in terms of dollars in the type of investment. And we want to validate, is it technical feasible to deliver this offering? Can it commercially, operationally be done? And is it really delivering the value we would like to see with the end user and end customer? And then the other part is really to go into if it's a developing product with KDS, so can it only deliver value in one case, but does it have the economics, the technical readiness and the commercial readiness and the market readiness to really scale. So these two parts are really about finding the product market fit. Here, we've had quite a traction. And over the last year, we have a number of new incubation projects coming out. And one that we are focusing on even more is dedicated networks, which I will talk about in a bit, that has now been established as a peer technically and operationally, we move into what we call the acceleration unit. This is really where we have into the Ignition business, they can with sustaining growth in a sustainable way. We do know that not all will scale. So the ambition is of course, we're at the moment with strong, very strong traction in IoT. And we have communicated quite consistently over the last year. We continue and we are doubling down on it because we see a lot of traction and high return on the investments we're making there. Whereas we can also come to the conclusion that it didn't develop as we wanted or it developed well, but it's not for us. This is one of the conclusion we'll come to when it comes to edge gravity, where we did not see the progress in missing the milestones as we've wanted and would have expected. And hence, we have decided to exit the Edge Gravity business. We have looked at spinouts, and we also looked at selling it. But right now, we have concluded that a close down of the business is the best path forward the business. And it's driven by the performance development, the milestone tracking milestone development. But we also have a market where the hyperscalers are moving aggressively into the edge space and working closely with the Swiss too. So also the competition in this area has increased. With that said, we are not giving up on the edge. So we are investing as a company even more in the exposure orchestration part to be able to expose network capabilities at the edge, both with SysTUs and hyperscalers. And that's where Jan Carlson, you probably will hear from his presentation and ask it on BGS, that's an area we are investing intensively in. And that will support both our dedicated networks and our IoT edge gravity, really sad, but I think it's also a proof point of a disciplined model, a winner to build to also exit and close businesses that are not performing or developing as we would like to see. With said, a lot of the focus, we're talking a lot about the how. But if we look at where we focus going forward, we focus increasingly in offerings, opportunities and segments where we see an opportunity to create value for enterprises. And as you know, most enterprises and most industries have been on a transformation journey now for quite some time. And they're now going into the next journey where, I would say, connectivity and the connectivity platform is becoming of increasing importance to deliver on the goals and challenges they have. To really make that happen, there are a couple of important things that are important. One is when it comes to the business consideration, the company is really looking for how can we transform our business? How can we quicker than ever optimize supply chain, our operations, the way we price what we offer by being more data driven and support real time decisions. But many are also seeing a big need to step back in the contribution of investing in digital infrastructure and digitize the business is a key enabler for all these three goals. It helps to accelerate the transformation. It helps to become more data driven and optimize operation. And in many cases, it also reduced some energy improve the energy efficiency and improve the infrastructure, there are a number of technology considerations. So one is what is the platform that can help digitize several of the different needs of the digitization journey. 2 is how do you secure your infrastructure, but also products and services as the head of threats, both when it comes to also want flexibility. And if you look at this parameter, this is also want flexibility. And if you look at those parameters, this is where cellular connectivity typically comes in as a sweet spot because cellular connectivity and especially with the new generation 5 gs, they are unraveled when it comes to being one platform that can support a multitude of cases, being more secure than any other connectivity form and also allows for that flexibility. And I think we can go back to that, but it is interesting now when we have a lot of conversation with industrial leaders during the COVID-nineteen crisis. But many have realized that this infrastructure not only important to meet flexibility and the demand for hyper increased customization and personalization and because they're flexing demand for customers. But it's also critical in times like this when you have both demand and supply shocks to be able to remain resilient. So this is, I think, if I'm missing the need for this technology shift and investing in that the digital infrastructure is becoming more important than ever. And that is really guiding where we are investing our where we are investing for growth. And if we look at where our growth is focused right now, it's really on, I could say, in the enterprise value, Post and White as well. It is because of the relevance and the trends and the news that you have described. And we see that it's a big opportunity for us to build standalone profitable businesses that gives us a viable entry to the downside segment through the business and together with the business. But it also helps us secure sustainable demand for Aerosol's core business by driving the usage of mobile 5 gs network for network investments. For instance, there is so much more upside to capture when it comes to drive cellular adoption in the new enterprise segments that are not enjoying flexible mobile and secure connectivity at, including industrial sites, offices. I think if you think even more about the situation we're now, we're working from home. But also, there is a huge opportunity to make our technology easier to access and consume such as in the cellular IC space. And we believe we can increase that share from 10% to 30% when it comes to cellular share of the IoT connectivity market. So how will we go address that? Well, we focus on our service provider, and that is our primary go to market channel, it will remain that way. We are focusing on enabling new revenues for the cities. And as you will see, a lot of our new businesses are linked and based on strength when it comes to connectivity and related technologies, and that also provides a higher synergies, higher success rate but also higher return on investments we make. We are focusing though on scalable solutions. So it's a solution that can scale, typically software based with limited in house system integration needs. And we will continue to do this in the structure approach I described where we're delivering that through end to end unit setup. And this has a number of benefits. It gives the season autonomy that you need the beginning to grow a new business, but it also secured the transparency of this than the other return. And in the case we need to ramp down or exit, as we now cited with, ash gravity, it gives us that bid also for those type of decision as part of this to continue strengthening our product portfolio and secure time to market of the offerings we are investing on. I mentioned one new unit. Ericsson's dedicated network is a newly formed unit where we have been in the space before, and we've had advanced industry units with Industry Connect as early incubation. We also have a private networks portfolio primarily in Benyo. Now we are combining all of that into one unit where we manage the business for local networks, local private networks in 1 unit. It's really focused on, I would say, 2 things. 1 is to help accelerate the enterprise digitization journey with 4 gs and 5 gs. And but also to modernize a lot of the private communication systems that are out there, which is a big opportunity that is having an also strong growth and grow demand. Here, we really want to support operators and their channel partners because they typically work with SIs. So I know we quite often get the questions, how will service providers be successful in addressing this opportunity as well, typically in the enterprise digitization journey, there are several players out there. And most of the operators are either having a few big ones have their own SAI, but many are working already with the living SAOM to go after this space. And here, we see an opportunity then to both support industrial conferences, but also manufacturing. You could think about also utilities, oil and gas plants as well as mines. Here, we are leveraging and reusing a lot of Ericsson products and operations. And we also support dedicated R and D to make sure that we accelerate development of the specific features that are needed in this environment, but also make sure we have the form factor to improve the offering, the packaging, delivery and operations, so we can actually add value and enable scale in this new environment. And thirdly, we are focusing on further developing the ecosystem, including the solution partners to further enhance the value, make sure not only the system can be installed, but used with high value adds. And I will get back to this a bit more later in the presentation. If we then go into the summary, so based on that, the focus we have right now in the portfolio is doubling down on IoT and industrial side connectivity, as I mentioned before. And we have our Global Connectivity Management there. We have the our dedicated, I could say, global IoT platform, which helps manage connected assets for thousands of companies across 100 markets in the world right now. It's been scaling and growing quickly. We'll get back to the progress on that in a bit. But here, we really want to use our core technology, our relationship with the business to bring simplicity in connecting devices and unlock the insights from the devices and operations across different companies and many, many markets. Here, we have an underlying trend of prediction going from SEK 1,000,000,000 connected cellular devices to SEK 1,000,000,000 connected cellular devices to SEK 5,000,000,000 over the coming 5 years. So here is a strong trend, strong growth trend. Another area is connected vehicles, which is, of course, one of the things that can be connected on the platform, but we see a big value of, you could say, connectivity enablement services on top of connectivity management. Here, there is a need for manage the connectivity but also the service innovation and to augment the value of connected vehicle services. There are also a lot of less work near capabilities that are required and we see an increasing demand of, have optimized data that goes back and from the car. We're working with leading OEMs that basically predict that they will have terabit of uplink data per car in a month. To be able to manage that, you need more than connectivity management, connectivity coverage. It's important to optimize what's the data store, what's in the car, what's the process in the car in the cloud or at the edge. So here, we are working closely with leading OEMs to develop the relevant services, and we are focused on the network near Perth. Industrial site connectivity is really to help unlock the value from Industry 4.0 by making sure that these industrial sites are connected with secure and mobile connectivity that enable them to take the next step when it comes to flexible production and advanced operations. Here, it's a portfolio both download and hybrid deployments, and it's our dedicated efforts unit who is that they've prescribed, who is that is focused on capturing accelerating capture that value. And then we are continuing to explore data and network insights because we do believe that we lost a base on the many network insights, but we'll be opportunity to learn and profit from them. Many players in this space, we believe our sweet spot is focused on where the network insights deliver value in context with other data. Here we have, as you know, just before our platform Emoto, focusing on advertising, but we also see application for that platform in several other areas that we are exploring right now. And then at the bottom, you see the results of one of the other incubation areas that developed over the last year, and that is Ericsson Security Manager, which is an add on offering that is now being bundled both Connectivity Management, the dedicated networks but also with our 5 gs core in our core portfolio. It really addresses some of the needs to optimize and predict security management to be able to protect both all the nodes and also billions of devices that are being connected on the network, and we see quite exciting commercial traction there at the moment. Just to clarify, we talk often about our go to market. It is indeed through the service providers. You see here to the left, Ericsson, we are selling through and we're the service provider. But of course, to be able to make them successful to target enterprises and OEMs, we are also working closely in terms of relationships and having strong partnership with enterprises and OEMs so we can develop the right solutions, the right value added services, but also get the packaging and commercialization rights for the service providers for this to be successful. We also are, of course, working with the Viasat Industry and SA players because in all the areas that I have described, they are extremely important to be able to deliver the value efficiently and at scale and to make sure that our solutions are both recommended, referred and used in the market. And typically, it depends on a bit by often, but typically then we sell to the service providers. So in many cases, we do where we generate revenues, we get the revenue share out of the value that is delivered to the enterprise. That is the case for the ISU platform, for the ISU platform that it also differ a little bit by offering. But a quick summary on where we are when it comes to the business. We continue and we're still committed to drive growth, both in sales but also improving the margin of the Emerging Business segment. We are determined to continue optimize, make sure we put that capital where we see most traction and potential for the future and hence decision to invest in more in some areas like Erithin dedicated networks and excess cash grabbing. To give a few highlights of the progress, we have, at the moment, more than $55,000,000 subscription on the platform with a subscriber growth well above 100% consistently over the last year, and that is continuing. And well above, I can tell it's been in the range between 100% and 200% growth quite consistently. We also see a strong growth of enterprises enterprises that are being onboarded on platform. And we have, in total, 5,700 enterprises last time I checked, and it's growing constantly with more than 30% or sometimes way above that. And we're now present in 100 countries. And I think it's also quite exciting to share that we are right now market leading when it comes to our U. S. Management capabilities. We have more than 3,500,000 euros to say devices or things. It's everything from parts to customer with localization that if you can get the same service experience as you are locally in the network locally in the network in a country versus the classic roaming model. This is a huge value to the enterprise. We have at the moment a big market load, which is also confirmed by the demand pickup, but also the increases from several of the segments, especially high value segments in the automotive and industrial point 5,000,000 cards connected on our C2C platform. If you look at it also on the 2 platforms combined, it's, of course, even high number. So how is this being used? Well, there's a very diverse set of cases and partners. And I think the exciting part is actually scaling on the platform so the model works. One example is how we together with Sprint and Hitachi Vantra launched a smart video analytics or offering on the CreoFity platform, which is powered by our Global Connectivity platform. And I think it's a great example of cases we see increasingly because it's more than tracked asset trackers and smart meters being connected right now with the increasingly broadband cases, real time surveillance, real time video analytics that is used for security cases, for smart city optimization, etcetera. And we see a tremendously growth in that area. We also have exciting cases that are trying to address important economic and social problems. 1 is Global Tracker as part of that together with Magenta in Austria is trying to attack the case of food waste. There's so much food that's been wasted because the refrigerated containers are getting disconnected or it's not getting the energy they're needed, but with our solution, we have a global solution where they can predict and track before they run or even before their failures to reduce the food waste globally. Brighter is another because the spot of kids are now quickly going global. Several launches in Southeast Asia, including Singapore, Middle East, but also in Europe, where they are changing the life of diabetes patients. And make it not only a habit, but basically automate the care of diabetes patients, which is literally changing the world for literally many, many types of many people globally. And then we have the Amber solution, another example of mine. Now I could go on and on and on. There are so many cases here. I want to talk just quickly before we open up for questions. I want to share some of the specific progress, 1st on our IoT platform and then on the dedicated network side. With regard to with IoT Accelerator, our global connectivity platform, requires often getting the question, how is that differentiating from the competition? And how is that really tracking? I shared the progress with you. And I think, if anything, we have besides a lot of the commercial traction, which is really driven by a number of advantages, we now have a very strong global footprint and a unified integration. We also are one of the few ones who has, as I mentioned, eSIM capability. But it's eSIM capability with global reach and scale. We but we also are trying to address important pinpoints that enterprises are experiencing. So typically, for an enterprise to installation, we can remove the roaming and secure a consistent SLA and network parity globally. Number 2, with a new function, which we call the reseller application, we are actually able to provide 1 global contract enterprises through 1 lead system on our platform with pre negotiated rates and levels. And finally, and very importantly, the enterprise also gets full visibility and the control of IoT devices. So they can manage their business regardless of how it goes across operator borders or cellular type of implementation. I think the way the area where we really focus on is a couple of things. I think besides working several of the operators, there is one core network. So we basically can deploy and manage these millions of connected assets globally with a consistent user experience, thanks to that one global core network that is shared. And this means a couple of things. It also makes it easier for us to launch globally consistent services. It also by having that dedicated core, we can secure that the service experience is always delivered. What is exciting here is we also tried a 5 gs test set, and it's not in the lab itself. So we tried it out live in the market in Asia. So this is really progressing quite exciting, Leon. At the moment, we have a headwind when it comes to the capability versus competition. But it also means that when you have dedicatedness, it's only your data traffic flow. So it's not competing with, if it's the regular consumer business, which is extreme important when it comes to several of the more high value industrial grid because we are also here working increasingly with several partners and upgrading our own capabilities to enable, if you said, both real time analytics and over high degree, and we're making it easier with an API source approach to take place to quickly plug into the platform and develop upon it. And I think the curiosity in Hitachi Vantra case is one excellent example. If we then move to dedicated networks, I described communication infrastructure. And this is an existing market. It is the communication infrastructure. And this is an existing market, because that's been there for quite some time, where they now want to upgrade. They want to upgrade to make sure they get the support for data and video, where many of the legacy systems cannot support them. They want to make sure they can work with real time remote expertise and others to augment the worker capabilities and also scale expertise. And they also realize they're sitting on a lot of unnecessary complexity and high costs with this legacy system. On one hand, that's an existing market intra efficient with an real upgrade node. That's one part of the market where that we are tackling and addressing. The other part is really linked to the industry decision that I talked about earlier in the presentation, which is really about how can you advance operation, how can you advance operation through automation, improve productivity and quality? But it's also about how can you improve the work efficiency and how can you improve the environment for workers? And how can you also contribute with a more efficient energy savings as well as a better CO2 footprint. And finally, many of us see this as a way to start to generate completely new revenues, a new business model. For instance, we are deploying a system in a mine in Norway, which allows Volvo to deliver their autonomous drive as a service. I want to talk, so why are then you could ask yourself, so why are then industries really investing in stand alone dedicated networks? Well, you could say there are a number of reasons, as I explained, both to modernize existing networks, but it's also to drive that digital transformation. Here, we see different cases, because there are different grades of how both complex differences these companies are, but also how many deployments you actually have and the size of those sites. One example here is if you look at oil and gas, mines, ports, airports, utilities, they typically have those sites in the numbers of 100, but I know you have list number 100 per country between 10 100 depends on which area you look and what country you look. And typically, you have not always, but quite often larger areas, whereas when it comes to many of the warehouses, the smaller enterprises, the manufacturing sites, we're talking about the particularly smaller areas and a large number. I think in total, we have 10,000,000 factories in the world, just as an example. And if you compare that to the consumer side, we typically set up 2 to 3, 4 networks per country that serves millions of consumers. Here, we're talking about millions of systems that each can manage perhaps a number of people. But I think importantly also a lot of devices, machines, etcetera. And I think as you can see here, besides modernization, it's also to provide connectivity to the sites that are not connected at all today, where it can provide security to people in the mines or you can also mitigate risk of outside attack to secure on prem networks. But finally, you can also see that the high performance connectivity that really can provide full control of facilities, both in operations but also when it comes to securing the actual facility. We are working with a number of thought leaders in space across segments. I would say overall, the automotive side is really in the lead. They've been higher of autonomous guided vehicles. They have a high degree of automation compared to many other industries. So it's no I would say there's it's not by coincidence that we've seen many of those clearly in the early adopters of cellular connectivity in 5 gs. Here, we are working with several of the leaders, and here is just a couple of examples. There are more. We're working with Mercedes Benz and their model factory in Germany, which basically becoming a model factor for the fully autonomous and flexible plant in the future for automotive. Today, we cover with our solution a plant of 22,000 square meters, and this is this factor that we're going to use as the model for all the factories in the world going forward. Similar case with BMW, where we are connecting the industrial campus together with Deutsche Telekom in Germany, and they have similar addition. We're also working with several of them on some of the ultra reliable low latency capabilities that are not fully commercial yet, but will come out. And Audi is one of those examples. And this is so important. So we start to because they understand the value of the cases, but also stimulate device readiness ahead of when the technology is ready for market commercialization. But we're also working with many other leading industrial players. Atlas Copco in Belgium, we are connected with Industry Connect, and we've now used to both remotely monitor some of the facilities, reducing for ADB, but also for asset tracking optimization. And ADB Power Grids is in this case, using Industry Connect and expanding that at the moment, We're deducing our connectivity to increase worker productivity and also connect some of the tools they have that has been completely linked to cables before and they can now cut them, cut them off. But we're also deploying our own, if you say, hitting our own medicine here. So we are, of course, going 5 gs and some of the first thing, our factories. We have connected a factory in China, in Estonia. And I think most recently, we have a full 5 gs enabled factory in the U. S. And the new factory opening up this year in Dallas. I think with that, I'm going to round up and make sure we have also time for questions. I hope you were able to follow the presentation. Thank you very much, Otta. And like you said, we got off to a little bit of a late start. We're sorry for that. We still have some time for questions. But before we start, I have a small request. And that is that you please focus your questions towards those areas of responsibility. For broader company group questions, IR will be happy to help you at any point after this call. Thank you. And with that, Nazz, could you please start the Q and A session? Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. Our first question comes from the line of Daniel Julia from Handelsbanken. Please go ahead. Thank you very much, Asaf, for an interesting presentation and thanks for letting me on. My first question would be on the closing of Edge Gravity, the former Ericsson UGN. Can you comment about the amount of write down we will see on back of this? I guess, you have some capitalized development cost for this or if it's already written down. And also if it was mainly changes in the market for edge compute or CDN market with more flexible pricing from competitors that did hit you or if it was more about collaboration with Laimite and so on, if you could comment a bit more? Absolutely. So thank you. Good question. So first of all, if we start to start with your question on capitalization. There's no capitalization when it comes to the development. So there will not be anything of that. We are finalizing be any write downs, but we're not ready to give any indication on size of order magnitude yet. But if we will have, we most likely will come back with that in association with the Q2 report. But I cannot give an indication on any number yet. I think when it comes to kind of development, I would say there are 3 things. I think the business model and the idea was actually working. It's just that the scaling of the cases went a bit too slow. So I think we would have needed much faster ramp up of the new cases. I think also the CDN part took off, but we would need we probably would have needed to see even more scaling of other cases in parallel. So I think that is kind of that is kind of the short answer. I think that has happened in the same time as the edge computing markets evolve quite quickly, and we realize that this is still a bare metal as a service kind of offering. We need to rather play through a strength to move faster to orchestration and exposure. So we decide as a company to make that shift and do that sooner rather than later if we want to play to our strengths, work with the hyperscalers. So that's kind of, I think, the short answer I have there. I think it's also fair, I can also say that if you look at the costs excluding restructuring, we're not foreseeing a with the plan and the target that we communicated. Okay. One more question, if I may, before going into the queue, if I may, or and that would only be on Thank you. Yes, thank you. And that would be on your you're quite stringent with that you go to market this with service providers, communication service providers. But we do see an evolvement of shared spectrum, CBRS, etcetera. And there might be a number of cases where enterprises would like to work with perhaps Microsoft, Azure or Cloud, with Google or Amazon or whatever and still wanted to work with you as well on both the dots, but also perhaps some platform, etcetera. Would you back up from those kind of businesses? Or I would say right now, we're actually tackling it in a different way. We actually I would say even in cases where you could say it's not a CBRS spectrum, but also if you look at where the operators on the spectrum, many enterprises want to work with an ecosystem that is beyond, of course, Ericsson and the 50s. So we are, if anything, expanding and working closer with both SI players, device players, app players, but also the hyperscalers. So here we are and we are launching actually this week one example of that where we are working with systems and hyper scalars to improve both offering and the reach of some of our solutions. So we will focus on doing that to make sure that the cities can win together with us and the hyperscalers where all of us can filter strength. When it comes to the because the corner cases where others have spectrum that is used to, we're not speculating at that now. We'd rather make sure we have the right offerings to right offerings and the right partnerships together with the cities to be relevant to the end users. And that's where we focus. And then we'll make that decision market by market if that comes over and over. Okay. Daniel, are you happy with Our next question comes from the line of Peter Kuertnin from ABG. Please go ahead. Thank you very much and thank you for your presentation. Also just a question relating to the latter part, your comments about dedicated networks for industries and enterprises. And I guess that as you touched upon the security element is, of course, one aspect, and I assume a fairly important one given you're sort of getting into the core businesses of these operators. Considering sort of the global security discussions, etcetera, we're living with lately, is that the security element something that in addition to your product competitiveness, did you feel that this is something that is working out to Ericsson's advantage at the moment? Is that something you're feeling in the marketplace when you're entering these discussions with your end customers and the service providers, please? Thank you. Well, I think there are different levels. You can talk about security. But I think where we do have a strong advantage, and that's really to being the market leader in 5 gs and special technology when it comes to the fact that 5 gs in itself is probably most secure, connectivity type and network that is available. 5 gs is much more secure than any previous standards and other connectivity types of the market. And a lot of I think what is quite important understanding, a lot of that security is built into the standard. So I think Ericsson's big advantage here is clearly that we are a leader in this technology. That is by because of the way it's been defined and the way it's been developed, it has a much higher security level. Then I think there's another thing you're alluding to, which is to me more related to costs. And yes, we are as a company focused on staying remaining a trusted partner with high both, if you could say, ethical but also focus on our customers and trust. And that will continue. And that will continue within our base business and with new business. And I think it's highly related to our brand overall. So that's something different than because the security of the technology itself. Okay. Thank you very much. Okay, Peter. Thank you. And we are approaching the hour. So with the late start, I'm afraid, we are arriving at the last question. So Lars, if you could go ahead, please. The last question comes from the line of David Mulholland from UBS. Please go ahead. Hi. Thanks for taking the question. I just wanted to come back to some of the first slides you presented in terms of the model in which you try and bring new businesses through and new ideas through. Can you give us any metrics on what success rates you have? How many opportunities make it through to incubation, how much then make it through into the acceleration and what scale have you got so far of stuff that's actually turned in from initiation internally into something that's now a kind of millions or 100 of millions of sec business for you? Good. Thank you. I think it's a good question. Then of course, I think we're still to balance, I think we're still early to early days to have really robust numbers. But if we look over the last 12 months, in the initiation, we're roughly in we've been that has been growing from basically where we started 2 years ago, that was, you could say, in the 50s. And then perhaps in incubation phase, you had 20. Now we are rather in the 1,000 in initiation phase. We probably are having numbers of 100 in ideation, but we still have around 20 to 30 in incubation. And I think the big thing is not only how MANIDA passed through, but it's actually the quality and the caliber as well as we've also been able to reduce the investment levels per product quite dramatically. So we our starting point was where we I think we spent too much on projects for too long. So I think that is hopefully giving an indication where we are at. But I think the big progress we're improving by the bigger volume and bigger discipline and higher velocity, we're actually getting to a better caliber and quality of the ideas that are going through the stages, and we're doing it to the lower cost per Friday. Maybe just a follow-up on that because obviously this is very much a kind of private equity type business model, try lots and hopefully a couple pay off. It's fine failing fast, but you're still spending money. So to make any of this pay off, you still need something to be successful. So do you have confidence you will get something through incubation then into acceleration and making it to that scale that can thousands of projects that have had some level of investment in? Yes. I think it's a fair and good question. Yes, I have confidence in that. And I think the big reason is we're still limiting the investment quite a lot in in the ecosystem what we are in Ericsson 1. So that is a limited part of the funnel. So where we actually spend more are the ones where we calibrated and validated more. And I think there's one area where we see enormously strong growth, which has a lot of value, I would say, in itself, and that is really the IoT platform. So that's one that I see a big hope for. And then we're hopeful that I see huge potential and it's delivering in line with expectations. The other part is dedicated networks together with 2 other confidential or, I can say, opportunities that are fairly late in the incubation phase. They all 3 have the opportunity well, are in sufficient to be able to move to the next phase. So I think we have a strong pipeline and much longer than we've had for a long time. Okay. Thanks very much. Super. And with those final comments, we will conclude today's call with Asa. Thank you very much, Asa, and thank you very much everyone dialing in. I hope you found the call productive and interesting. A week from now, June 3, we will have a session with Peter Laurin, the Head of Managed Services. So stay well until then and goodbye for now. Thank you. Thank you. This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.