Hello, welcome to Ericsson's conference call. To view visual aids for this call, please follow the Skype link provided in your confirmation email. Ladies and gentlemen, when you would like to ask a question, please press zero one on your push button phone. If you'd like to decline from the polling process, please press zero two. Stefan Jelvin will now open up the call. Please go ahead.
Thank you, Naz, and welcome everyone to today's call. It is the first in a series of calls where our business area heads will present current topics, new contracts, or other interesting news and developments. The format is straightforward. We plan for a 45-minute session and more or less 50/50 between presentations and Q&A. Today is the first call in this series, and it is my pleasure to introduce Åsa Tamsons, the Head of Business Area Technologies and New Businesses. Åsa, please go ahead. The stage and screen are yours.
Thank you. Thank you, Stefan. Nice to meet you all. Thank you all for joining this session. What I would like to do today is to share a quick business update on Business Area Technologies 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 come to a place where we have both stability and profitability in our core business. Excuse me, could all of you go on mute if you're not on mute? There's some background noise. Thank you. We're of course, also investing now in growth in our core business. 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. Here is really the focus of the Business Area Technologies and New Business. Our mission is really to support the company in identifying, developing, and accelerating new growth. It's not any growth. It's really growth that are building on the strengths we have in 5G and IoT and the related underlying trends. We are focused on making our primary customers, the service providers, succeed in new value pools with us. We are, as I have described before, we are using a lean startup approach to validate and scale the idea. If we look then at our current bets, they are centered on a couple of areas where we see big relevance of our technology, but also strong fundamental and underlying growth.
Those areas include global connectivity management, connected vehicles, industrial site connectivity, and network and data insights. I've been speaking quite a lot about a disciplined and lean startup approach to growth, and what does that mean? Well, it means that we follow what we call a five I process. We start from initiation through ideation, incubation, and once we have a validated offering that we believe has the potential to scale, it can go into ignition, then further into incorporation. This is also how we have structured the portfolio. We have a unit called Ericsson ONE, which is really the platform for identifying and generating ideas. Here we are trying to focus on ideas that are in line with our strategy and that can help us and the CSPs to address big and growing markets in transformation, such as transportation, Industry 4.0, et cetera.
Here we really want to give, because these smaller investments stimulate ideas. For instance, we have a tool here called Idea Drop, where we, over the last 12 months, generated more than 1,000 ideas just from our employees alone. We're also working with universities and 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 pressure test, is there a real problem? Here we try to limit the investment as much as we can up front to really validate, is this a real problem or is this a problem that we would love to solve? Here we typically spend four to eight weeks to do that through a rapid prototype and very limited investment.
We go into what we call incubation. This is basically building an MVP. We call the MVP in two phases. One is MVP that basically answers the question: Can it be done? This is a phase of, say, four to six months, where we typically have maximum $300,000 in terms of dollars in type of investment. We want to validate, is it technically feasible to deliver this offering? Can it commercially, operationally be done? Is it really delivering the value we would like to see with the end user and end customer? The other part is really to go into, like I said, developing product MVP. Can it not only deliver value in one case, does it have the economics, the technical readiness, and the commercial readiness, and the market readiness to really scale?
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 Ericsson Dedicated Networks, which I will talk about in a bit, but it's now been established as a clear incubation unit. Once we go through and we see that we have an offering that is ready to scale efficiently, commercially, technically, and operationally, we move into what we call the acceleration unit. This is really where we have into the ignition phase, since they can withstand the growth in a sustainable way. We do know that not all will scale. The ambition is of course to scale.
We at the moment, have a very strong traction in IoT, and we have communicated quite consistently over the last year that we continue, and we are doubling down on IoT because we see a lot of traction and a 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 conclusions we come to when it comes to Edge Gravity, where we did not see the progress in meeting the milestones as we wanted and had expected, and hence we have decided to exit the Edge Gravity business. We have looked at spin-outs, 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 for the business.
It's driven by the performance development, tracking the milestone development. We also have a market where the hyperscalers are moving aggressively into the edge space and working closely with the systems too. Also the competition in this area has increased. With that said, we are not giving up on the edge. We are investing as a company even more in the exposure and orchestration part, to be able to expose network capabilities at the edge, both with systems and hyperscalers. That's where Jan Karlsson, you probably will hear from his presentation and after the DS webinar, we are investing intensively in, and that will support both our Dedicated Networks and IoT offering.
That decision to exit Edge Gravity, really sad, but I think it's also a proof point of a discipline model, and we need to be able to also exit and close businesses that are not performing or developing as we would like to see. With that said, a lot of the focus, we talked a lot about the how, but if we look about where we focus going forward, we focus increasingly in offerings, opportunities and segments where we see an opportunity to create value for enterprises. 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's 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? Many are also seeing a big need to step up in the contribution of meeting sustainability targets and reduce the CO2 emissions. Here the interesting part is that, typically investing in digital infrastructure and digitizing 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 improves the energy efficiency and improve the CO2 footprint.
When it comes to that digital infrastructure, there are a number of technology considerations. One is, what is the platform that can help digitize several of the different needs of the digitization journey. Two is, how do you secure your infrastructure, but also products and services as the bedrock both when it comes to product services and the people. Thirdly, flexibility. Many are looking for global solutions that can scale, but they also want flexibility. If you look at this parameter, this is where cellular connectivity typically comes in as a sweet spot. Cellular connectivity, and especially with the new generation 5G, we are unrivaled 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.
I think we can go back to that. It is interesting now when we have a lot of conversation with industrial leaders during the COVID-19 crisis, that many have realized that this infrastructure is not only important to meet the flexibility and the demand for increased customization and personalization, and because they're flexing demand for customers. It's also critical in times like this when you have both demand and supply shock to be able to remain resilient. This is, I think, if I'm missing the need for this technology shift, then investing that the digital infrastructure is becoming more important than ever. That is really guiding where we are investing for growth. If we look at where our growth is focused right now, it's really on, you could say, in the enterprise value props and why is that?
Well, it is because of the relevance and the trends and the moves I just described. We see that as a big opportunity for us to build standalone profitable businesses that gives us a viable entry to the enterprise segment through the CSPs and together with the CSPs . It also helps us secure sustainable demand for Ericsson's core business by driving usage of mobile 5G networks and network investments. For instance, there's 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 yet, including industrial sites, offices. I think if you think even more about the situation we're now working from home. Also, there's a huge opportunity to make our technology easier to access and consume, such as in the cellular IoT space.
We believe we can increase that share from 10%- 30% when it comes to cellular share of the IoT connectivity market. How will we go address that? Well, we focus on our service provider, and that is our primary go-to-market channel, and it will remain that way. We are focusing on enabling new revenues for the CSPs . As you will see, a lot of our new businesses are linked and based on a strength when it comes to connectivity and related technologies, and that also provides a higher synergies, higher success rate, but also higher return on the investments we make. We are focusing, though, on scalable solutions. Solution that can scale, typically software based with limited in-house system integration needs. We will continue to do this in the structure approach I described, where we're delivering that through end-to-end unit setup.
This has a number of benefits. It gives the speed and autonomy that you need in the beginning to grow a new business, but it also secured the transparency of the spend, of the return. In the case we need to ramp down or exit, as we now did with Edge Gravity, it gives us that speed also for those type of decisions, versus if it's too fragmented and integrated. We will also look at inorganic growth as part of this to continue strengthening our product portfolio and secure time to market of the offerings we are betting on. I mentioned one new unit, Ericsson Dedicated Networks is a newly formed unit where we have been in this space before, and we've had advanced industry units with Industry Connect as early incubation. We also have a private networks portfolio, formerly in BNEW.
Now we are combining all of that into one unit where we manage the business for local networks, local private networks in one unit. It's really focused on, I would say, two things. One is to help accelerate the enterprise digitization journey with 4G and 5G. Also to modernize a lot of the private communication systems that are out there, which is a big opportunity that is having also strong growth and grow demand. Here we really want to support operators and their channel partners because they typically work with SI. I know we quite often get the questions how will service providers do successfully 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 SI, but many are working already with leading SI players to go after this space. Here we see an opportunity then to both support industrial campuses, 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&D to make sure that we accelerate the 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 it can actually add value and enable scale in this new environment.
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. I will get back to this a bit more later in the presentation. We now go into the summary. Based on that, the focus we have right now in the portfolio is doubling down on IoT and industrial site connectivity, as I mentioned before. We have our global connectivity management there. We have our dedicated, it's a global IoT platform which helps manage connected assets for thousands of companies across hundreds of 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.
Here we really want to use our core technology, our relationship with the CSPs to bring simplicity in connecting devices and unlock the insights from the devices and operations across different companies in many markets. Here we have an underlying trend of prediction going from one billion connected cellular devices to five billion over the coming five years. Here we see a 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 managed connectivity, but also the service innovation and to augment the value of connected vehicle services.
There are also a lot of network-near capabilities that are required, and we see an increasing demand of how to optimize the data that goes back and from the car. We're working with leading OEMs that basically predict that they will have one 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 data to store, what's in the car, what to process in the car, in the cloud, or at the edge. Here, we are working closely with leading OEMs to develop the relevant services, and we are focused on the network-near part.
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 is a portfolio of both standalone and hybrid deployments, and it's our Dedicated Networks unit that I have described, that is focused on accelerating capture of that value. We are continuing to explore data network insights, because we do believe there will also, based on the many network near insights, there will 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, before our platform Emodo, focused on advertising, but we also see application for that platform in several other areas that we are exploring right now. At the bottom, you see the result of one of the other incubation areas that developed over the last year, and that is the Ericsson Security Manager, which is an add-on offering that is now being bundled both with global connectivity management and dedicated networks, but also with our 5G core in our core portfolio. It really addresses some of the needs to optimize and predict the security management to be able to protect both all the nodes, but also billions of devices that are being connected on the network. We see quite exciting commercial traction there at the moment. Just to clarify, we talk quite 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 with the service providers. 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 partnerships with enterprises and OEMs. We can develop the right solutions, the right value-added services, but also get the packaging and commercialization rights for the service providers to be successful. We also are, of course, working with device, app, industry and asset 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.
Typically, it depends a little bit by offering, but typically with them, we sell to the service provider. In many cases, the way we generate revenue is we get a revenue share out of the value that is delivered to the enterprise. That is the case for the IoT platform, for the CSPs , but it also differs a little bit by offering. A quick summary on where we are when it comes to the business. We stay committed to drive growth, both in sales, but also improving the margin of the emerging business segment. We are determined to continue accelerating our growth, but we're also taking a disciplined approach to growth, and hence we will proactively make sure that we manage and optimize to make sure we put our capital where we see most traction and potential for the future.
Hence, efficiently invest even more in some areas like IoT and dedicated networks and exit Edge Gravity. To give a few highlights of the progress, we have at the moment more than 55 million subscription on the platform. We've seen a subscriber growth well above 100% consistently over the last year, that is continuing. 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 that are being onboarded on platform. We have in total 5,700 enterprises last time I checked, it's growing constantly with more than 30% and sometimes way above that. We're now present in 100 countries. I think it's also quite exciting to share that we are right now market leading when it comes to our eSIM management capabilities.
We have more than 2.5 million, could say devices or things. It's everything from cars to coffee machines and other things that are connected through eSIM and managed with eSIM with localization. That is, you can get the same service experience as you are locally in the network in a country versus the classic roaming model. This is a huge value to the enterprise, and we have at the moment a big market lead, which is also confirmed by the demand pickup, but also the interest we see from several of the segments, especially high-value segments in the automotive and industrialized space that are looking for industrial-grade connectivity. As you can see, we have more than 4.5 million cars connected on our CVC platform. If you look at it also on the two platforms combined, it's of course, an even higher number. How is this being used?
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 Vantara, launched a smart video analytics offering on the Curiosity platform, which is powered by our global connectivity platform. I think it's a great example of cases we see increasingly because it's more than asset trackers and smart meters being connected right now. We see increasingly broadband cases, real-time surveillance, real-time video analytics that are used for security cases, for smart city optimization, et cetera. We see a tremendous big growth in that area. We also have exciting cases that are trying to address the importance of the economic and social problems.
One is Mobile Tracker, a product that, together with Magenta Telekom in Austria, is trying to attack the case of food waste. There's so much food that's being wasted because the refrigerated containers are getting disconnected or it's not getting the energy they needed. With our solution, we have a global solution where they can predict and track when or even before there are failures to reduce the food waste globally. Brighter is another specific product case and are quickly going global. Several launches in Southeast Asia, including Singapore and Middle East, but also in Europe, where they're changing the life of diabetes patients and make it not only a habit, but they sort of automate the care of diabetes patients, which is literally changing the world for literally many people globally. We have the Ambra Solutions, another example of ours.
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, first on our IoT platform and then on the dedicated network side. We start with IoT Accelerator, our global connectivity platform, we're quite often getting the question, how is that differentiating from the competition? How is that really tracking? I shared the progress with you, 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, it's eSIM capability with global reach and scale.
We also are trying to address important pain points that enterprises are experiencing. Typically, for an enterprise to onboard and get cellular global connectivity to work, they typically need to engage with one or several operators, and they also typically need to have several contracts, and they need to have roaming agreements. Through the eSIM solution, we can remove the roaming and secure a consistent SLA and network parity globally. Number two, with a new function, which we call the Reseller Application, we are actually able to provide one global contract to enterprises through one legal entity on our platform with pre-negotiated rates and levels. 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 area where we really focus on is a couple of things. I think besides working with several of the operators, there is one core network. 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. This means a couple of things. It also makes it easier for us to launch globally consistent services. By having that dedicated core, we can secure that the service experience is always delivered. What is exciting here is we also tried our 5G test bed, and it's not in the lab, we tried it out live in the market in Asia. This is really progressing, quite exciting. At the moment, we have a head start when it comes to the capability versus competition.
It also means that when you have dedicated links, it's only your data traffic flow, so it's not competing with the, you could say, the regular consumer business, which is extremely important when it comes to several of the more high-value industrial-grade cases. We are also here working increasingly with several partners and upgrading our own capabilities to enable both real-time analytics and over higher degree. We're making it easier with an API-first approach to players to quickly plug into the platform and develop upon it. I think the Curiosity and Hitachi Vantara case is one excellent example. If we then move to dedicated networks, I described before that there are two big drivers for this type of networks. One is the upgrade of those who already have private communication infrastructure.
This is an existing market, you could say, 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 it. They want to make sure they can work with real-time remote expertise and others to augment the worker capabilities and also scale expertise. 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 in transition with a real upgrade need. That's one part of the market that we are tackling and addressing. The other part is really linked to the industry digitization 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? It's also about how can you improve the worker safety, and how can you improve the environment for the workers, and how can you also contribute with a more efficient energy savings and as well as a better CO2 footprint. Finally, many also see this as a way to start to generate completely new revenues, so new business models. 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, you could ask yourself, why are the industries really investing in standalone dedicated networks? Well, you could say there are a number of reasons, as I explained, both to modernize existing networks, it's also to drive digital transformation.
Here we see different cases, and you could say different grades of how both complex different systems and needs 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, airport utilities, you typically have those sites in the numbers of hundreds. There is less number hundreds per country, between 10 and hundreds, depends on which area you look and which country you look. 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 typically smaller areas and a large number. I think in total, we have 10 million factories in the world, just as an example.
If you compare that to the consumer side, where we typically set up two to three, four networks to country that serve millions of consumers, here we're talking about millions of systems that each can manage perhaps a number of people. I think importantly also a lot of devices, machines, et cetera. 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 attacks with secure on-prem networks. Finally, you can also see that 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 number of thought leaders in this space across segments.
I would say overall, the automotive side is really in the lead. They've been high adopters of autonomous guided vehicles. They have a high degree of automation compared to many other industries. I would say it's not by coincidence that we see many of those players being the early adopters of cellular connectivity and 5G. Here we are working with several of the leaders, and here is just a couple of examples, there are more. We are working with Mercedes-Benz and their model factory in Germany, which basically becoming a model factory for the fully autonomous and flexible plant in the future for automotive. Today, we cover with our solution, a plant of 22,000 sq m and this is this factory that they'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 because they understand the value of the cases, but also stimulate the device readiness ahead of when the technology is ready for market commercialization. We're also working with many other leading industrial players. Atlas Copco in Belgium, we are connected with Industry Connect, and it's now used to both remotely monitor some of the facilities they're using for AGVs, but also for asset tracking optimization.
ABB Power Grids is in Ludvika using Industry Connect and expanding that at the moment, where they're using our connectivity to increase worker productivity and also connect some of the tools they have that has been completely linked to cables before and that they can now cut them off. We're also deploying our own, you can say, eating our own medicine here. We are, of course, going 5G and cellular first in our factories. We have connected a factory in China, in Estonia, and I think most recently, we have a full 5G enabled factory in the U.S., in the new factory we're 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, Åsa. 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. Before we start, I have a small request, and that is that you please focus your questions towards Åsa's areas of responsibility. For broader company group questions, I or will be happy to help you at any point after this call. Thank you. With that, Naz, could you please start the Q&A session?
Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you'd like to ask a question, please press zero one on your push button phone. If you'd like to decline from the polling process, please press zero two. Our first question comes from the line of Daniel Djurberg from Handelsbanken. Please go ahead.
Thank you very much, Åsa, for an interesting presentation, and thanks for letting me on.
Yes.
My first question would be on the closing of Edge Gravity, the former Ericsson UDN. 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. Also if it was mainly changes in the market for edge compute or CDN market with more flexible pricing models from competitors that did hit you or if it was more about collaboration with Limelight or, and so on. If you could comment a bit more.
Absolutely. Thank you. Good question. First of all, if we start with your question on capitalization. There's no capitalization when it comes to the development. There will not be anything of that. We are finalizing negotiation with some of the partners, and I think, as we close that up in the coming weeks, we will know if there will be any write-downs, but we're not ready to give any indication on size or order of magnitude yet. If we will have, we most likely will come back with that, in association with the Q2 report. I cannot give an indication on any number yet. I think when it comes to development, I would say, there are three 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.
I think we would have needed a much faster ramp-up of the new cases. I think also the CDN part took off, but we probably would have needed to see even more scaling of other cases in parallel. I think that is the short answer. I think that has happened in the same time as the edge computing market evolved quite quickly, and we realized that this is still a bare metal as a service kind of offering. We need to rather play to our strengths, move faster to orchestration and exposure. We decided as a company to make that shift and do that sooner rather than later, if we want to play to our strength to work with the hyperscalers. That's, I think, the best, the short answer I have there.
I think it's also fair, I can also say that if you look at the cost excluding a restructuring, we're not foreseeing a big negative impact here. That is already in line with the plan and the target that we communicated.
Okay. One more question, if I may, before going into the queue, if I may?
Absolutely.
Thank you. You're quite clear with that you go to market is with service providers, communication service providers, but we do see an evolvement of shared spectrum, CBRS, et cetera.
There might be a number of cases where enterprises would like to work with, perhaps, Microsoft or Azure or a cloud with Google or Amazon or whatever, and still want to work with you as well on both the (nodes), but also perhaps some platform, et cetera. Would you back out from those kind of businesses?
I would say right now, we're actually tackling it in a different way. I would say, even in cases where you could say it's not the CBRS spectrum, but also if you look at where the operators own the spectrum. Many enterprises want to work with an ecosystem that is beyond, of course, Ericsson and the SI. We are, if anything, expanding and working closer with both SI players, device players, app players, but also the hyperscalers. Here we are and we are launching actually this week one example of that, where we are working with systems and hyperscalers to improve both the offering and the reach of some of our solutions. We will focus on doing that to make sure that the system can win together with us and the hyperscalers, where all of us can play to our strength.
When it comes to the, you could say, the corner cases, where others have spectrum than the System C, we're not speculating at that now. We'd rather make sure we have the right offerings and the right partnerships together with the System C to be relevant to the end users. That's where we focus. We'll make that decision market by market if that comes or when it comes.
Okay. Daniel? Perfect. Are you happy with that?
I'm very happy. Thank you, and good luck.
Thank you.
Yes. Next question?
Our next question comes from the line of Peter Kurt Nielsen 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. I guess as you touched upon the security element, this 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, et cetera, we're living with lately, is that the security element something that in addition to your product competitiveness, do 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.
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 5G and cell technology, when it comes to the fact that 5G in itself is probably most secure connectivity type and network that is available. 5G is much more secure than any previous standards and other connectivity types of the market. I think what is quite important understanding, a lot of that security is built into the standard. I think Ericsson's big advantage here is clearly that we are leader in this technology. That is, because the way it's been defined and the way it's been developed. It has a much higher security level. I think there's another thing you're alluding to, which is to me more related to trust.
Yes, we as a company focus on remaining a trusted partner with high, both, you could say, ethical but also focus on our customers and trust. That will continue within our base business and with new business, and I think it's highly related to our brand overall. That's something different than, you could say, the security of the technology itself.
Okay. Thank you. Very good.
Okay, Peter. Thank you. We are approaching the hour, so with the late start, I am afraid we are arriving at the last question. Last, 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 make it through into the acceleration?
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 hundreds of millions of SEK business for you?
Good. Thank you. I think it's good question. Of course, to be honest, I think we're still early days to have really robust numbers. If we look over the last 12 months in the initiation, we're roughly and, that has been growing from basically where we started two years ago. That was, you could say, in the 60s, and then perhaps in incubation phase, we had 20. Now we are rather in the thousands in initiation phase. We probably are having numbers of the hundreds in ideation, but we still have around 20-30 in incubation. I think the big thing is not only how many that pass through, but it's actually the quality and the caliber, as well as we also been able to reduce the investment level per product quite dramatically.
Our starting point was where we, I think we spent too much on products for too long. I think that is hopefully giving an indication where we are at. I think the big progress we improve in the bigger volume and bigger discipline and higher velocity, we actually get into a better caliber and quality of the ideas that are going through the stages, and we're doing it to the lower cost per idea.
Maybe just to 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.
Yeah.
It's fine failing fast, but you're still spending money. To make any of this pay off, you still need something to be successful. Do you have confidence you will get something through incubation then into acceleration and making it to that scale that it can justify and pay off the dozens of projects that have had some level of investment in?
Yeah, I think 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 the ecosystem, what we are in Ericsson ONE. That is a limited part of the funnel. Where we actually spend more are the ones where we calibrated and validated more. 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. That's one that I see big hope for, and then we're hopeful, but I see huge potential and it's delivering in line with expectations. The other part is Dedicated Networks together with two other confidential, or you could say, opportunities that are fairly late in the incubation phase.
They all three well, are positioned to be able to move to the next phase. I think we have a strong pipeline and much stronger than we've had for a long time.
Okay. Thanks very much.
Super. With those final comments, we will conclude today's call with Åsa. Thank you very much, Åsa, and thank you very much everyone dialing in. I hope you found the call productive and interesting. A week from now, June 3rd, we will have a session with Peter Laurin, the Head of Managed Services. Stay well until then, and goodbye for now.
Thank you all. Thank you.
This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.