Cisco executive chairman John Chambers explains the rationale behind the 'next-generation strategic partnership' with Ericsson – it's all about speed.
November 10, 2015
The role and opinion of customers is vital, noted Chambers. "There are two sets of people who need to 'get' an idea like this -- the customers and the sales teams. If you have to explain it to customers, then it's not going to work. And the sales teams, they really get this -- they are really excited. If we get this right we will leave our competitors behind," added Chambers, without mentioning Huawei Technologies Co. Ltd. , NokAlu or any of the major enterprise IT companies that are hoping to wrestle business away from the traditional communications networking vendors.With speed of action so important, the companies are aiming to get on with the job of working together to target the communications service provider market, starting with the resale of each other's products, joint professional services engagements (including systems integration and managed services), joint cloud and 5G architecture engagements and cross-licensing deals."This is a multi-phased approach -- this is just phase 1," noted Chambers. "You can see us already working on phase 2 and we are dreaming about what phase 3 is. That gives the staying power -- it won't be a year or two transaction. We will be so deeply intertwined it will be like a marriage except we can make it happen faster," he added.Phase 2 includes IoT platforms, integrated network management solutions, cloud and data center capabilities, optimized backhaul, professional services for enterprises and the development of systems that can deliver "seamless indoor/outdoor access."Want to know more about the Internet of Things? Check out our dedicated IoT content channel here on Light Reading.Trust and corporate governance
Now there will be close scrutiny on how the dynamics and details of the partnership will manifest themselves, how the companies will jointly engage in R&D process and in customer engagements and how the partnership will impact their top and bottom lines.Key to the "trust" mentioned by Chambers as being vital to the relationship will be the ability to agree on which of the partners owns any resulting product developments. Vestberg noted that "we are going to decide who owns the joint solutions -- they will be jointly developed but one party will own it. We will agree on that … it will be defined very clearly in the partnership agreement," said the Ericsson CEO, adding that it would make sense for Cisco to take the lead on enterprise-focused products and Ericsson on service provider developments (though that seems like wishful thinking on Vestberg's part).Vestberg also said that the relationship has been set up so that one company does not benefit at the expense of the other. "It will not result in $5 billion in sales for Cisco and $100,000 for Ericsson -- the partnership will be balanced," and both companies will be shooting higher than the $1 billion in incremental revenues that both are targeting from the partnership by 2018.To keep things on track, the CEOs of the two companies will meet each quarter to review progress. "We will have very rigorous oversight. This is a model built for the long term," said Vestberg.But what if things go wrong? What is the partnership unravels?Chambers said that the partnership has already established focus areas and goals for the next three-to-five years and that many of the details about what will be done and how have already been decided. "Most partnerships and acquisitions don't work because that sort of thing isn't done in advance. Something else might trip us up but it won't be that. Watch closely how this next generation strategic partnership works and what it is like -- it is a game-changer," and will be the model for future industry relationships, he proclaimed.— Ray Le Maistre, , Editor-in-Chief, Light Reading
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