Ericsson and Cisco Systems – two technology juggernauts in their own right -- have struck a global business and tech partnership aimed at achieving more scale and building the “networks of the future.”
They said the multi-faceted deal , which represents an incremental revenue opportunity of $1 billion-plus for each company by calendar year 2018, will offer customers products from both companies spanning several areas, including routing, data center, networking, cloud, mobility, management and control, and global services capabilities.
Cisco and Ericsson added that the resulting partnership will target service providers, enterprises, and companies tied into the growing Internet of Things ecosystem, and cover network architectures such as 5G, cloud, IP, as well as devices sensors.
The deal will have competitive ramifications for many of Cisco’s and Ericsson’s rivals, including Huawei Technologies, Arris, and Nokia, which is acquiring Alcatel-Lucent for $16.6 billion.
Cisco and Ericsson said they are now starting work on a joint initiative focused on software defined networking/networks functions virtualization and network management and control.
The deal will be underpinned by multiple agreements that include commitments to network transformation through reference architectures and joint development, systems-based management and control, a broad reseller agreement, and collaboration in key emerging market segments.
The parties have also agreed to discuss FRAND policies and enter a licensing agreement for their respective patent portfolios. The companies said they have 56,000-plus combined patents, invest in $11 billion or R&D, and have a combined 76,000 professional services staff.
As part of this agreement, Ericsson will receive license fees from Cisco.
“I am excited to work with Cisco on continuing to shape the Networked Society. 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,” Ericsson president and CEO Hans Vestberg said, in a statement. “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.”
“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,” added Chuck Robbins, CEO of Cisco, who recently succeeded long-time CEO John Chambers. “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. Our partnership will drive growth for both companies, unique value for our customers, and incredible innovation for the industry.”
The release announcing the deal also included statements of support from several of their largest customers, including Vittorio Colao, group chief executive of Vodafone; Randall Stephenson, chairman and CEO of AT&T; and Roger Gurnani, EVP and chief information and technology architect at Verizon Communications.