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Ericsson sees smartphone use, video surging

The exterior of Ericsson's headquarters are seen in Stockholm April 30, 2009. REUTERS/Bob Strong
The exterior of Ericsson's headquarters are seen in Stockholm April 30, 2009. REUTERS/Bob Strong

STOCKHOLM (Reuters) - The number of subscriptions for smartphones globally will nearly quadruple by 2018, driving a huge increase in data on mobile networks and forcing operators to invest in high-speed networks, Ericsson said on Monday.

Ericsson, the world's biggest supplier of mobile network equipment, said it expected 4.5 billion smartphone subscriptions globally by 2018, up from 1.2 billion in 2012 and higher than the 3.3 billion it forecast at the end of last year.

Ericsson - a leading supplier of high speed networks - said it expected data traffic to grow 12-fold by 2018, mainly driven by video as mobile users increasingly use smartphones and tablet computers to watch movies and TV on-the-go.

"Video makes up the largest segment of data traffic in networks, and it is expected to grow around 60 percent annually up until the end of 2018," Ericsson said.

The huge rise in smartphone sales in recent years has shaken up the mobile handset industry, knocking Finland's Nokia off its perch as the leading handset supplier and briefly crowning Apple Inc. as biggest company in the world by market capitalization.

Since hitting a record close of $702.10 last September, Apple has shed 44 percent, as investors fret whether it can keep up the pace of innovation and on worries about competition from rivals like Samsung, now the biggest seller of smartphones.

Japan's Sony, Korea's LG, China's ZTE and a host of other smaller players also want to carve out a bigger niche in the lucrative market.

Sales of phones which allow users to watch videos, play games and surf the net on-the-go have surged in the last few years, putting an increasing strain in overloaded networks, forcing operators to invest heavily in new equipment to boost capacity.

Data traffic doubled between the first quarter of 2012 and the same period in 2013.

To meet the demand on infrastructure, operators will expand super-fast, high-capacity 4G networks - which Ericsson calls LTE - to cover around 60 percent of the world's population by 2018, up from around 10 percent in 2012.

Ericsson has been investing heavily in video technology to capitalize on the growth in traffic. In April, it agreed to buy Microsoft Corp's Mediaroom IPTV business, which makes software used by phone companies to deliver television over the Internet.

(Reporting by Simon Johnson)

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