Meantime, Ericsson’s core business of supplying equipment has suffered from price competition and from the relatively slow rollout of broadband wireless networks, known by the acronym 4G, by its carrier customers. “Seamless wireless” also scored several mentions, with Robbins intimating that Cisco’s very good at IP networks and Wi-Fi, Ericsson’s very good at wide area wireless and the two can now work on handoff between all three of the aforementioned technologies.
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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.
There were plenty of rumors and speculation that someone would buy Ericcson after the Nokia/Alcatel-Lucent deal was announced, and Cisco was a likely candidate, as the two companies seem to fit together.
The deal goes on to be described to include routing, data centers, networking, cloud, mobile, and global service capabilities.
The alliance will help add $1 billion or more in annual sales for each company by 2018, Ericsson and Cisco said. “This is way beyond that”.
In addition, Ericsson and Cisco are now working on a licensing agreement for their respective patent portfolios. “It is a market in transition – increasingly mobile, cloud-based, and digital – and customers are seeking end-to-end solutions to reach their full potential”, wrote Vestberg in a blog post. “A few of them fear Google as a competitor”, Nolan said.
A strategic partnership, rather than a merger, “brings innovation from both sides and allows us to act now”, Robbins said.
Cisco has joined forces with Ericsson, as the tech giants bid to create the networks of the future in a projected billion-dollar sales opportunity.
(NASDAQ:CSCO) announced on Monday that they agree for a business and technology partnership. Nokia agreed to take over Alcatel-Lucent in April, after years of deal-making in the industry that included Nokia combining its networks business with that of Siemens and France’s Alcatel acquiring Lucent Technologies Inc. “I am going to have to focus on the strategic partnership with Cisco”, he said.
“Between us and Cisco, we hold more than 56,000 patents, invest $11 billion annually in research and development and operate more than 76,000 services professionals serving customers in more than 180 countries”, he said in the blog. Both businesses will ensure that telecom, enterprise networking and carrier infrastructure will be standardized so that both brands can interconnect and work seamlessly. “We have spent the past 13 months discussing this”, he said. “We concluded this was the best thing for us as well as for our customers”.
However, the analyst firm says there are areas where the companies will need to tread carefully for the success of the partnership. “Clearly, a partnership was the only way forward”.
Stock market reaction to the announcement was muted.
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Shares of Ericsson gained 1.6 percent to close at $9.99.
