Ericsson and Cisco have announced a significant strategic partnership the companies say will generate at least $1 billion in revenue for each party by 2018. Here are the key details from their joint press release:
The multi-faceted relationship will offer customers the best of both companies: routing, data center, networking, cloud, mobility, management and control, and global services capabilities. Together the companies plan to deliver customer value by:
Offering service provider customers an end-to-end product and services portfolio, and joint innovation that accelerates new business models,
Creating the mobile enterprise experience 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.
In a world driven by mobility, cloud, and digitization, the networks of the future will require new design principles to ensure they are agile, autonomous, and highly secure. Ericsson and Cisco will meet this challenge together by offering end-to-end leadership across network architectures including 5G, cloud, IP, and the Internet of Things - from devices and sensors to access and core networks to the enterprise IT cloud. Customers will be able to accelerate their business transformation by drawing on the parties' complementary capabilities, including global services capabilities such as consulting, integration, and support to managed operations across IT and networks.
POV: The tech industry sees a great many "Barney" partnerships—amounting to little more than "I love you, you love me"—but this does not appear to be one of them. Cisco and Ericsson's agreement has teeth, with the companies agreeing to jointly work on network reference architectures and resell each others products. Teams from each company are also set to begin working on a project involving software-defined networking and network function virtualization.
The companies also intend to ink a licensing deal for each others' patent portfolios, which they say will provide "unfettered joint innovation" and reassurances for customers. The pending agreement will see Cisco pay license fees to Ericsson, according to a statement.
Cisco and Ericsson have actually been discussing the partnership for 13 months, Ericsson CEO Hans Vestberg said during a conference call with analysts and media: "We can kick this off tomorrow."
While deep, the partnership stops well short of a merger, which means questions of product overlap and retirement aren't immediate concerns for customers. It also means Cisco and Ericsson can move much more quickly to drive the partnership forward. This is an important consideration amid the dynamics of the IoT market, which is seeing dramatic growth even as industry standards for it remain in flux. While Ericsson and Cisco's deal doesn't appear to be exclusive, the level of cooperation planned seems like a win for customers and the IoT market overall.