& cplSiteName &

How Will Ciena + Ericsson Play Out?

Ray Le Maistre
2/14/2014
50%
50%

So Ciena and Ericsson have fallen into each other's arms and are whispering sweet nothings about packet-optical transport and software-defined networking (SDN) into each other's ears. (See Ciena, Ericsson Embark on SDN, Optical Love Affair.)

But might this relationship start as a global partnership and end with wedding bells? Could we be talking about Ciericcson or Ericiena in a few years' time? (Obviously, if ever these two did merge, you would have to imagine that common sense would prevail and a decent name would be found. Stranger things have happened though...)

As you can imagine, the topic of potential M&A activity between the new partners is not something that Ciena Corp. (NYSE: CIEN) and Ericsson AB (Nasdaq: ERIC) are going to discuss, but it's obvious that even if it hasn't been tabled as an official agenda item at their partnership meetings, it will have been on everyone's minds, even if only as a fleeting possibility.

And why not? The global vendor market will inevitably shrink further as margins get squeezed in the infrastructure markets and as competition arrives in the SDN and network functions virtualization (NFV) world from IT firms that are not traditionally players in the telecom space. So consolidation is a given. It's a case of which companies will join forces and which will die.

For any mergers to make sense, there will need to be a sensible combination of products and services and an amiable cultural fit.

If you take a look at their core strengths, a marriage of the two vendors would seem to make sense on paper. Ericsson has the full set of mobile infrastructure offerings (radio access, packet core, IP routing), global services and Service Provider Information Technology (SPIT) systems (OSS, BSS, policy, IMS etc), while Ciena has an impressive lineup of optical and Carrier Ethernet capabilities.

But does Ericsson need a Ciena? Well, a number of Ericsson's main rivals have strong optical businesses: Alcatel-Lucent (NYSE: ALU), Cisco Systems Inc. (Nasdaq: CSCO) and Huawei Technologies Co. Ltd. spring most readily to mind. And while Ericsson does have an optical transport portfolio, it's far from being in the leading pack. So from a competitive point of view, strengthening the transport part of its business would be a good move.

Why? Because it's an increasingly critical part of the portfolio: Let's not forget that as SDN, NFV and telco datacenters become the de facto elements in any communications service provider (CSP) arsenal, the quality and reliability of the transport network becomes even more essential to the successful delivery of services and applications, and therefore, ultimately, a positive customer experience.

As for the cultural side of things, it's always hard to know how well (or badly) two companies might mix. For me, the only way to find out if the respective CEOs -- Ciena's Gary Smith and Ericsson's Hans Vestberg -- could help deliver a united, harmonious merged company is by setting an example from the top would be to send them out on a karaoke evening, and see what happens. Could they choose appropriate songs for each other? Would one hog the microphone? I'd be prepared to join them to find out -- maybe they'd both be free during Mobile World Congress to take a late night trip to Barcelona's Manchester Bar in the old town, sink a few cerveza and crank up the volume. I'm sure their PAs will let me know if they're free.

You Know You Want To!!
Come on Gary, Hans... it could be fun, right?
Come on Gary, Hans... it could be fun, right?

So if this Valentine's Day relationship blossoms into an engagement and ultimately a marriage (shotgun or otherwise), don't be surprised. The next year or so will see if they are suitable bedfellows.

And don't even get me started on whether Nokia Networks and Juniper Networks Inc. (NYSE: JNPR) should be more than just close friends…

— Ray Le Maistre, Editor-in-Chief, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
R Clark
50%
50%
R Clark,
User Rank: Blogger
2/16/2014 | 10:38:49 PM
Heading for the altar
I think Ray's analysis is right that the parties must be seriously contemplating a merger, but it all gets down to the chemistry.

These marketing partnerships often get into trouble because of the lack of clarity and corporate politics, especially if there are competing products.
sterlingperrin
100%
0%
sterlingperrin,
User Rank: Lightning
2/14/2014 | 3:22:51 PM
Re: overlap
I understand that the MLH 3000 is weak and the Ciena products would be clearly preferred. But I view the SPO 1400 as a pretty strong product in packet-optical transport and don't see Ciena's packet-optical as a clear winner (they are both strong) - this may be the point you make about MPLS-TP.

Still, from what I've gathered it looks like Ericsson has indeed placed both MLH 3000 and SPO in the legacy/maintenance bucket. If that's not true, they need to clarify...

 

Sterling
mfaisalk
100%
0%
mfaisalk,
User Rank: Lightning
2/14/2014 | 2:25:58 PM
overlap
There is one part of the transport where there is an overlap with Ercisson certainly has strength in their product compared to Ceina i.e MPLS-TP. So I do not agree with the assumption that Ciena has a clear leadership when it comes to " carrier ethernet portfolio". However when it comes to the DWDM/OTN part, Ciena clearly is way ahead of Ericsson. So lets see how this global agreement unfolds. To me , it is more of a strategy aimed at unifying the SDN direction of the two. Just my two cents....
PaulERainford
50%
50%
PaulERainford,
User Rank: Light Sabre
2/14/2014 | 10:17:15 AM
Man in Black
That's a superior karaoke session you've got there - the bloke on the left is Johnny Cash, unless I'm much mistaken. Any Cash classics appropriate to cable empire-building? 'One Piece at a Time' maybe?
More Blogs from Shades of Ray
I'm just back from a brief visit to Tel Aviv where I met a broad range of innovative teams from companies as diverse as AT&T, Sedona, Allot and Ethernity.
Time is running out to get your entries in for the industry's most prestigious awards.
The Light Reading group is now much more than the mothership website and the Heavy Reading analyst group -- the family has grown to include the Telecoms.com news site, dedicated communities and wiki-style databases.
I'm prepared for the worst that Barcelona can throw at me.
Ahead of MWC in Barcelona, talk has started to circulate that nuptials may be in line for Cisco and Ericsson.
From The Founder
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
Masergy: It's Time for SD-WAN Options

6|28|17   |   03:09   |   (0) comments


Paul Ruelas, director of network products for Masergy, explains how adding SD-WAN has changed the service mix for his company's customers. In some cases, the change is incremental, enabling more granular customer control. Masergy's newest version, SD-WAN Go, gives up some of those controls for a streamlined version targeting mid-sized customers with the most ...
Women in Comms Introduction Videos
Intel Ushers in the Revolutionary 5G Era

6|28|17   |   5:00   |   (1) comment


5G will bring job opportunities for women in telco and IT, as well as a whole new era of communications for consumers and industries of all kinds, says Caroline Chan, vice president and general manager of the 5G Infrastructure Division at Intel.
LRTV Custom TV
VeEX at ANGA COM

6|27|17   |     |   (0) comments


At ANGA COM 2017, Cyrille Morelle, president and CEO of VeEX, updates Alan Breznick with VeEX's new products and technology. This includes VeSion cloud-based platform for network monitoring, AT2500-3G advanced spectrum analyzer and MTTplus-900 WiFi Air Expert module. He also comments on DOCSIS 3.1 deployment and Remote PHY technology.
LRTV Custom TV
The Overall Objective Is to Win the Game

6|26|17   |     |   (0) comments


SCTE•ISBE's Chris Bastian discusses Energy 2020's success to date and the importance of a flexible approach that allows for changes in specific strategies in order to reach significant milestones.
LRTV Interviews
CenturyLink: Let's Get Past SD-WAN Hype

6|23|17   |   04:02   |   (0) comments


Technology becomes a "shiny object" unless it's properly focused on solving business needs for enterprise customers, says Bill Grubbs, network solutions architect for CenturyLink. He explains to Light Reading why SD-WAN deployments have to be tailored to specific needs – and more.
Women in Comms Introduction Videos
Infinera's Sales Director Paints Tech's Big Picture

6|21|17   |   4:14   |   (1) comment


Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
LRTV Custom TV
SD-WAN Innovation & Trends

6|20|17   |     |   (0) comments


Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
LRTV Interviews
Ovum's Dario Talmesio on 5G in Europe

6|20|17   |   02:16   |   (0) comments


At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
LRTV Custom TV
Putting Power on a Pedestal

6|19|17   |     |   (0) comments


ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
LRTV Custom TV
Gigabit Access: The Last-Mile Pipe for All Future Services

6|19|17   |     |   (0) comments


A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
LRTV Custom TV
Key Factors to Successfully Deploy an SD-WAN Service

6|19|17   |     |   (0) comments


As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
LRTV Custom TV
IoT Solutions: Rational Exuberance

6|19|17   |     |   (0) comments


IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
Upcoming Live Events
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Montcalm Marble Arch
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
No Imagination: UK Chip Biz Goes Up for Sale
Iain Morris, News Editor, 6/22/2017
Does AT&T Deserve Time Warner?
Mari Silbey, Senior Editor, Cable/Video, 6/23/2017
Hulu Is Greatest Threat to Pay-TV Providers – Study
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 6/27/2017
Calix: Russo's Not-So-Overnight Success?
Carol Wilson, Editor-at-large, 6/28/2017
Verizon Takes 'One Fiber' to More Cities
Mari Silbey, Senior Editor, Cable/Video, 6/22/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.