Ericsson, whose days making cell phones are far, far away in its rear-view-mirror past, has been moving its intellectual property into developing IT infrastructure products and services for ISPs, government agencies and the military for years.
Nothing proves this point more than the huge global partnership the Stockholm-based company announced Nov. 9 with IT networking king Cisco Systems, a deal that is all about the Internet of things and one the two companies want to use to build what they call "networks of the future." This includes private, public and hybrid clouds, along with powerful new mobile networks for smartphones, sensors and automated devices.
What They Together Will Bring to the Market
Cisco and Ericsson, in a conference call to analysts and reporters Nov. 9, said they will deliver new enterprise value by:
--offering service-provider customers an end-to-end product and services portfolio, along with joint innovation that accelerates new business models;
--creating the mobile enterprise of the future through a highly secure technology architecture for seamless indoor/outdoor networks; and
--channeling the combined scale and innovation of both companies to accelerate the platforms and services needed to digitize countries and create the Internet of things.
Digitizing entire countries. That's rather a lofty goal.
The companies said on the conference call that they expect to bank incremental revenue of $1 billion or more by calendar year 2018; that is, if all goes according to plan.
Realistically, the agreement appears to boost both companies to a new, even larger-picture-level in the world of IoT networking. Each already has a high number of multinational customers with global data-moving, security and data-protection requirements. Whereas Ericsson and Cisco used to hire each other out to perform certain types of system installations, upgrades and maintenance jobs, a great deal of time and money will be saved for everybody because that work now will be put into fewer service-level agreements.
'Innovation': A Word Used Liberally
Naturally, when a deal like this is announced, the term "innovation" is strewn around like rice at a wedding. Sometimes actual good ideas do emerge from these marriages; sometimes these unions fall off a cliff. Ericsson and Cisco say their multi-faceted relationship eventually will produce new products in 5G connectivity, data routing, networking, IoT, cloud, mobility, data center management/control and global services capabilities.
Some of what the two companies do will overlap; there's no question about it. Both have cloud management platforms, mobile switching, signal routing, machine-to-machine communications and a long list of other items.
Cisco owns most of the world's market share in enterprise and consumer Internet routers and switches; it owns a big piece of the converged VCE server-storage hardware business—a partnership that VCE CEO Praveen Akkiraju recently told eWEEK is going great guns—and partnerships with virtually everybody in IT for whatever else it might need to satisfy customers.
However, Ericsson makes numerous pieces of the puzzle that Cisco doesn't, items such as telecom equipment, business applications, radio systems, video processors, modulators and so on. Go here to see a product list.
This isn't too far afield from the recent Dell-EMC merger—unlike this deal, an actual acquisition—which brought together two of the largest data center storage makers in the world. It's also interesting that Ericsson-Cisco and Dell-EMC are both about old-school IT survivors joining forces to stay ahead of all the young, more agile companies.
With the recent Western Digital-SanDisk merger, one could say there may be a trend in the old veterans banding together and circling the wagons, like the pioneers did in the settling of the American West.
The IP the two companies share is quite impressive. Ericsson and Cisco said they have a combined 56,000-plus patents, $11 billion of research and development investment, and more than 76,000 services professionals serving customers across more than 180 countries.
What the CEOs Say
"With the pace the market is moving, the successful companies will be those who build the right strategic partnerships to accelerate innovation, growth, and customer value," Cisco CEO Chuck Robbins said in a prepared statement. "Today's announcement brings together two visionary industry leaders, with complementary cultures and track records of innovation. We have worked with Ericsson during the last year on developing a strategy for future industry leadership, and can start executing together today."
"I am excited to work with Cisco on continuing to shape the Networked Society," said Hans Vestberg, Ericsson president and CEO. "Foremost, we share the same vision of the network's strategic role at the center of every company's and every industry's digital transformation. Initially, the partnership will focus on service providers, then on opportunities for the enterprise segment and accelerating the scale and adoption of IoT services across industries.
"For Ericsson, this partnership also fortifies the IP strategy we have developed over the past several years, and it is a key move forward in our own transformation."