The Meaning of the Cisco/Ericsson Partnership: More Fun Ahead

Carl Weinschenk
Slide Show

The Case for 'Craft IT'

Major announcements are vague. This certainly is true of mergers and acquisitions, due to the need to worry about regulatory and shareholder approvals. There may be a tiny bit more definition to announcements of partnerships. For legal and real reasons – companies often don’t know a whole lot about how things will shake out – partnership announcements tend to be broad and high level, as well.

Thus, the announcement today that Ericsson and Cisco will partner across the globe doesn’t have a lot of meat. The release essentially says that the companies will team to offer all the general things: growth, accelerated innovation, digital transformation and so forth. It has the requisite promise of an “end-to-end product portfolio” that will span “routing, data center, networking, cloud, mobility, management and control and global services capabilities.”

The two companies did offer one specific: The expectation is for incremental revenue of $1 billion for each by 2018.


The deal comes at a very important time in the history of networking. Software-defined networks and network functions virtualization (SDN and NFV) together are a fundamental reimagining of networks and services. The explosion of data demand is accelerating and the development of the next ambitious step in the effort to support cellular growth, 5G, is gearing up.

The vagueness, which would have been the case even in more predictable times, is understandable. The big vendors have both the most to lose and the most to gain in turbulent times. Banding together now and figuring out precisely where to throw the combined weight later makes sense.

The rapidly shifting landscape underlies Stacey Higginbotham’s early take on the Cisco/Ericsson deal at Fortune. She focuses on these changes: the emergence of the cloud as the place where all the important telecom and IT stuff happens, the maturing of the equipment market, and the fluid and real-time nature of the Internet of Things (IoT), to name the top items. The bottom line is that this is a fascinating time and, deep down, a challenge that the engineers, scientists and business thinkers at these companies probably relish. They are among the most powerful and influential of companies. At the same time, the playing field on which that status was earned is gone forever and the new field isn’t quite here yet.

So the question is whether they can stay on top. Though they have the money, there is no guarantee: Writes Higginbotham:

That shift is what Cisco and Ericsson are banking on. As part of that, they are helping customers in the Internet industry deal with the transition to software-defined networks, but they will also need to develop new products and skills to help with the new role that networks will need to play in the future. Doing this together will help the companies share some of that burden.

The world of technology is always changing. At this point, however, it’s striking how quickly things are shifting. The big players know this and understand that they need to reinvent themselves on the fly. Ingrid Lunden at TechCrunch sums it up nicely:

At a time when we are seeing a lot of chopping and changing among the bigger tech companies working in areas like network hardware and services — evidenced by Dell buying EMC, HP selling off businesses in the lead-up to its own split, and more — Cisco and Ericsson working together is a sign of how some in the old guard are rethinking their position as standalone companies in the face of newer and faster businesses that might eat their lunch.

The sensible takeaway is that the deal can best be seen as a microcosm of what is happening across the IT and telecommunications industries. For those watching, and almost certainly for those participating, it will be a fun ride.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.



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