Cisco andEricsson on Monday announced a partnership to build out a next-generation network for smart things and the carriers and enterprises that want to support such devices.
The deal plays to the companies’ strengths in cloud, data center, mobility, management and control, networking, routing and global services, they said.
Each company expects to earn about US$1 billion in revenue by 2018 from the deal, if all goes according to plan.
Cisco and Ericsson will support other agreements aimed at cutting through the walls and red tape standing in the way of their development efforts, reseller agreements, system management and marketing in emerging markets.
The relationship is not quite a marriage, but it’s much more than friends with benefits. It falls just short of a merger and is a reaction to the merging of Nokia and Alcatel-Lucent, said Roger Entner, principal analyst for Recon Analytics.
“It’s designed for Ericsson and Cisco to have better, broader and more compelling products and services to offer,” he told the E-Commerce Times. “It, impressively, shows how much the Internet has gone mobile and how much mobile can increasingly become the Internet.”
They’ll provide end-to-end solutions for the likes of Verizon and AT&T, according to the companies.
Verizon is looking forward to this partnership and the advances in wireless it will bring, said Roger Gurnani, chief information and technology architect atVerizon.
“This global partnership has the potential to reshape the industry,” he said.
After kicking off their strategies for the likes of AT&T and Verizon, the two companies will turn their attention to enterprises, Ericsson CEO Hans Vestberg said.
“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,” he said.
Because each company has a large footprint on both ends of the Internet of Things market — networking and networking equipment — they’ll have significant moment going forward, according to Karma Martell, president ofKarmaCom.
They both have “solid histories and brand recognition in systems integration and telecommunications,” she told the E-Commerce Times. “Combined they will have a robust sales force and R&D to go after and grow this area of business.”
Cisco and Ericsson have invested a combined total of $11 billion in research and hold more than 56,000 patents between them, they said.
Competition and Commitment
Despite possible synergies, the relationship won’t be without its challenges.
The Cisco-Ericsson partnership follows asimilar deal between Alcatel-Lucent and Nokia. In short, Cisco and Ericsson aren’t the first to realize that it’s a cloud-first, mobile-first world out there.
Besides competition, the relationship will be challenged by issues of commitment and control, according to Entner.
“The harmonization of everything that will be the big challenge,” he said. “It’s about bringing two companies in sync. Traditionally, there are very few partnerships and joint ventures that have actually worked out because, generally, you need one person to be in charge, not two.”