While Ericsson’s cloud and virtualization efforts remain secondary to its established telecommunications business, it’s cloud stack is gaining traction in that market based on its established operator deals and work with cloud-native focused vendor partners.

Monica Zethzon, VP and head of Ericsson’s Solution Area Core Networks Business Area Digital Services, noted during a recent vendor event that a vast majority of its customers are using Ericsson’s own cloud stack.

“In terms of number of deployments, we still have a ratio I would say of 75% of service providers have selected to use our cloud stack,” Zethzon said during the vendor’s recent Cloud Software and Services quarterly briefing event. She added that within that model, a majority of new contracts are selecting Ericsson’s Cloud Native Infrastructure (CNIS) platform that runs on bare metal compared to its virtualized infrastructure manager (VIM)-based NFV infrastructure (NFVI) platform.

As part of  the CNIS stack, Zethzon said that customers are using platforms from Ericsson partners like VMware and Red Hat, with some enthusiasm also for work with hyperscalers.

“We have deployments both with VMware and Red Hat with large providers, but of course hyperscalers are very high on the agenda for most of our customers,” Zethzon said. “Maybe not with an urgency for big commercial deployments, but definitely as part of something they want to be able to leverage.”

Ericsson last year announced an extensive integration with VMware to validate its cloud native-based 5G core to work as cloud native functions (CNFs) running on top of VMware’s Telco Cloud Platform. This included work with VMware’s Kubernetes-based Tanzu platform.

Ericsson has struck similar arrangements with Red Hat and the market’s largest hyperscalers.

This integration is beneficial for operators slogging down the cloud-native path. Zethzon noted that the difficulty in moving toward cloud native for operators should not be underestimated, but it’s opening up more opportunities for automation and security.

“You always need to make sure that your networks have the latest software because vulnerabilities, they grow over time and they grow quickly, which means the freshness of the software is very important in the network,” Zethzon explained, touting Ericsson’s work in developing platforms that can automate software updates in the network. “And with the introduction of cloud-native architecture where we have more microservices in the applications it will also give us the opportunity to update just a single microservice if needed, if, for example, we detect a vulnerability in one such area.”

These cloud-native efforts are important for Ericsson as it looks to squeeze profitability out of its cloud operations.

Ericsson last year announced plans to turn around those financials by “limiting subscale software development, accelerating automation to lower deployment and maintenance efforts, and changing focus from market share gains to profitable business.” It’s looking for that focus to allow for a fiscal break-even for the full year leading toward “long-term sustainable profitability.”

CEO Börje Ekholm told investors during the vendor’s most recent earnings call that Ericsson remained on track with its revised Cloud Software and Services strategy.

“So while results would vary between quarters, we are on track to reach our target of breakeven in 2023,” Ekholm stated during the most recent earnings call.

Ekholm also said he expects Ericsson will start seeing revenues later this year from its network API efforts, noting that topic gained significant momentum coming out of the recent MWC Barcelona 2023 event.

The vendor has repeatedly noted that potential was behind Ericsson’s controversial $6.2 billion purchase of Vonage Holdings.

“Like all new markets, it will take some time to build this new market as well, but we believe it can actually develop faster and grow bigger than the market for traditional communication APIs, and it will position Ericsson for a long-term growth and profitability,” Ekholm said.