Light Reading

How Will Ciena + Ericsson Play Out?

Ray Le Maistre

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
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.
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...


User Rank: Lightning
2/14/2014 | 2:25:58 PM
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....
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
If this week's coverage of 'Ciscosson' left you digitally indigested, as if you'd swallowed a John Chambers-sized meatball, then here's a tasty roundup.
If you work at a telco or a vendor that sells to traditional communications service providers, you need to watch this short video interview.
Cisco and Ericsson have been forced into each other's arms by that other courting couple, Nokia and Alcatel-Lucent.
The complete story of EANTC's independent test of Cisco's NFV infrastructure (NFVi) is now available as a PDF download.
I was at the front line of the SDN/NFV Cold War last week – it was noisy.
From The Founder
Steve Saunders provides an overview of white box networking and introduces a new "slim line" version of the OSI 7-layer model.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
Between the CEOs
Centec on Ethernet Switching

11|26|15   |   09:58   |   (0) comments

Centec CEO James Sun talks to Steve Saunders about Ethernet switching and the white box revolution.
LRTV Custom TV
Delivering Service Agility in the Virtualization Era

11|25|15   |   5.41   |   (0) comments

Interview with Massimo Fatato, WW OSS Business Lead, Hewlett Packard Enterprise.
Wagner’s Ring
How Might Open Source Fail?

11|24|15   |     |   (10) comments

Open source, SDN, and NFV are looking inevitable – but performance, standards proliferation and regulatory capture could derail the movement.
LRTV Custom TV
NFV Lifecycle Orchestration – a Fresh Vision for Telco

11|23|15   |   6.40   |   (0) comments

Simon Osborne, CTO Comptel, and Heavy Reading's Caroline Chappell reveal the business impacts of new SDN and NFV, and what the term service orchestration actually means. Together they define Lifecycle Service Orchestration and how the virtualized future will look for telecoms operators.
Between the CEOs
Cisco's Virtual Role in Saudi

11|20|15   |   12:15   |   (2) comments

Light Reading founder and CEO Steve Saunders talks with Zayan Sadek, Regional Manager at Cisco Systems, about the competitive communications services market and advance of virtualization in Saudi Arabia.
LRTV Huawei Video Resource Center
Huawei Leads With Kubernetes for Cloud PaaS

11|19|15   |   08:26   |   (0) comments

Huawei is looking to Kubernetes as a key tool for building robust open source technologies for customers and partners, said Ying Xiong, chief architect of cloud platform at Huawei, in an interview with Light Reading West Coast Bureau Chief Mitch Wagner at the recent Kubecon conference.
Women in Comms Introduction Videos
WiC in London: The Highlight Reel

11|19|15   |   5:33   |   (1) comment

NetCracker's Mervat El Dabae headlines an inspiring morning in London with help from leading women from Vodafone, TalkTalk, Hyperoptics and Ciena.
LRTV Documentaries
Why Saudi's So Hot for New Tech

11|19|15   |   05:07   |   (0) comments

Light Reading's Steve Saunders reports from Saudi Arabia, a hyper-competitive market desperate to embrace the next generation of communications technologies and services.
LRTV Custom TV
Why Data Models Deliver More Value Than Information Models

11|19|15   |   5.08   |   (0) comments

Stefan Vallin argues that more automation is needed to manage end-to-end services and the hybrid networks they run on, and that data models are key to achieving this.
Telecom Innovators Video Showcase
SDN Management & Orchestration in the WAN

11|17|15   |   7.20   |   (0) comments

Carol Wilson and Packet Design CTO Cengiz Alaettinoglu discuss CSPs' SDN service delivery and assurance requirements. Learn about a modular approach to building automated control, orchestration and management functions for the WAN that are policy- and analytics-driven.
LRTV Custom TV
Flash Networks: Optimizing for Radio Spectral Efficiency

11|17|15   |   3:34   |   (0) comments

Today most optimization vendors only focus on optimizing voice or data. Ofer Gottfried, Flash Networks' CTO, shows how improving data throughput and maximizing spectral efficiency reduces capital and operating expenses while also providing a platform for user engagement.
LRTV Custom TV
Making Pay-TV User Experiences Millennial-Friendly

11|16|15   |   6:42   |   (0) comments

The unique challenge of reaching and engaging Millennials is driving pay-TV video experience transformation that can include higher quality UIs, viewing of multiple content streams at once and seamless transitions between handheld devices and the television.
Allot MobileTrends Report H2/2015 reveals how daily online behavior can be used to discover smarter ways to profile customers and propose valuable, real-time offers to them.
Hot Topics
Samsung to Sell Wireless Networking Unit?
Dan Jones, Mobile Editor, 11/23/2015
Samsung: No Sale of Wireless Unit
Dan Jones, Mobile Editor, 11/25/2015
How Might Open Source Fail?
Mitch Wagner, West Coast Bureau Chief, Light Reading, 11/24/2015
Sprint to Get $1.2B From New Leasing Venture
Dan Jones, Mobile Editor, 11/23/2015
Networking Shines in HP's Gloomy Final Earnings
Mitch Wagner, West Coast Bureau Chief, Light Reading, 11/25/2015
Like Us on Facebook
Twitter Feed
December 15, 2015
Virtualizing Cable Services
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Centec CEO James Sun talks to Steve Saunders about Ethernet switching and the white box revolution.
Light Reading founder and CEO Steve Saunders talks with Zayan Sadek, Regional Manager at Cisco Systems, about the competitive communications services market and advance of virtualization in Saudi Arabia.
Cats with Phones
Can't Find the Phone on Thanksgiving? Click Here
Check under the cat! (hint: bottom right)
Live Digital Audio

Broadband speeds are ramping up across Europe as the continent, at its own pace, follows North America towards a gigabit society. But there are many steps to take on the road to gigabit broadband availability and a number of technology options that can meet the various requirements of Europe’s high-speed fixed broadband network operators. During this radio show we will look at some of the catalysts for broadband network investments and examine the menu of technology options on offer, including vectoring and for copper plant evolution and the various deployment possibilities for FTTH/B.