Digile’s research programs IoT and N4S opened many new perspectives to the operation of a traditional device supplier such as Ericsson. Starting with the capillary networks experiments Ericsson has now ended up in forming an internal startup type of a setup working in a development of operations (DevOps) mode. This means an environment where creating, testing and releasing software can happen rapidly, frequently and more reliably.

At its simplest, Internet of Things (IoT) is a digital view of the real world where data from devices and objects is transmitted for processing over a network using suitable software. The data is most likely processed on a cloud-based platform from which different views are created according to the intended purpose. Ericsson Research has been studying communication between devices for years. In particular, it has studied short-range radio technologies while taking into account things like energy consumption from a data source through a network, different interfaces and protocols into a cloud.

According to an estimate by the Gartner research company, there will be as many as 25 billion devices connected to a network in the world in 2020. The huge number of devices will change the ways of doing business.

”It is obvious that those devices will represent hundreds of fields of application from electrical grids to traffic, and of course everybody’s home electronics. This wide array of applications opens up opportunities for new business models and even new roles in value chains. We may also presume that entirely new ecosystems will be born,” says innovation advisor Jarne Atsar from Ericsson.


Atsar also says that the role of a traditional device supplier will change as well.

”It looks like the traditional idea of a device supplier that mostly has a product and a node will take a back seat and be replaced by service business. And if you want to be a winner in services, it is obvious that partnerships will increase in value, as one has to create services that are as easy to use as possible.”

Atsar doesn’t believe anyone will be able to be an expert in every area of IoT anymore.

”Specialization will be needed, and partnerships and ecosystems will most likely be born through these specializations.”

Capillary Data Fusion:
Ericsson’s way to make sense of the IoT-data

Ericsson has been creating a cloud-based data analytics and connectivity infrastructure called Capillary Data Fusion. When using a capillary network, all things at home, for example, can be securely connected, from coffeemakers and heating to sensors.

A capillary network uses short-range radio access to services, storage, and applications that are hosted in a cloud. The gateway is created through Wi-Fi or Bluetooth. Capillary Data Fusion is a way to create new services which use local data to make sense of the information.

“Part of the technology used in Capillary Data Fusion was developed during the Internet of Things program”, says Jarne Atsar.

In the IoT-program VTT and the Tampere University of Technology studied how software from different service providers was connected to become part of a cloud service that had been decentralized all the way to the gateway. They also studied how all IoT devices – even the smallest ones – could be controlled as large groups. This means that there is no need to separately configure each individual device, as one single command will be enough for all devices. These open source solutions were added to Capillary Gateway.

During the program, the eSIM concept was also analyzed. eSIM is a new standard promoted by network operators worldwide. Consumers can activate devices that use eSIM with the mobile network operator of their choice. An embedded SIM card need not be removed from a device anymore. The user can simply change the operator on the fly, and a new SIM will not be required.

”The eSIM adoption was studied in the program in collaboration with the Aalto University. eSIM is an essential standard that facilitates the commercial application of IoT. Expenses can be kept in check when huge numbers of people are no longer needed for things like changing SIM cards.”

The IoT program uncovered a clear need to create common standards. Standards would lower the threshold for new companies to join in the development of a common field of application and business.

With the help of the IoT program, however, companies were able to develop and expand their ecosystems. Elisa’s ecosystem network, for example, includes many companies. The ecosystem is based on the Elisa IoT service platform, on which companies can build their own IoT applications.

“These new business ideas require a whole set of new competencies and roles involving people from many different organizations compared to our traditional development set-up.”


Ericsson did research together with universities and the Technical Research Centre of Finland (VTT). In collaboration with the participating companies, such as Elisa and TeliaSonera, the IoT market was studied more broadly than usual by doing things like evaluating new ecosystems and value chains. Many small and medium enterprises also participated in the program at various stages. After a successful Lean and Agile transformation in one major product area supported by the Cloud Software-program and the first insights gained from the IoT-program Ericsson Finland joined the N4S- program focusing on building a continuous delivery capability that supports continuous experimentation with regular and fast customer feedback. Eventually this development turned into an internal startup.

The continuous delivery and continuous experimentation activities have been focusing on the rather fresh Device Connectivity solution in close cooperation with Aalto and Helsinki Universities. The results so far are very encouraging. All new functionality is “experimented” in weekly customer demos and customer satisfaction ratings give very positive indications. The throughput (amount of new functionality per delivery) has also increased 30% and lead times have shortened 50 %.

According to Program Manager Christian Engblom all these DIGILE programs offered a fruitful environment for capturing new business ideas.

“These new business ideas require a whole set of new competencies and roles involving people from many different organizations compared to our traditional development set-up. The collaboration created a completely different way of working and interacting with potential customers our current organizational set-up did not support this well enough.”

The solution is an internal startup.

Watch the launch of the Cookbook for the Succesful Internal Startups

“Starting with a Capillary networks experiments we have now ended up in forming an internal startup type of a setup working in a DevOps mode. It is located in the Digile premises in Otaniemi, and is in full speed developing a platform type of an offering that is to be launched in the end of the N4S- program”

Ari Turunen

Download the Cookbook for the Succesful Internal Startups here: