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New IP

Cisco Takes Ericsson Home to Meet the Family

LAS VEGAS -- Cisco Live -- Bringing a new romantic partner around to meet family and friends is always a big deal. Will they like each other? Will your parents bring out embarrassing childhood photos?

That's the stage, seven months since they first announced their engagement, that Cisco Systems Inc. (Nasdaq: CSCO) has reached in its relationship with Ericsson AB (Nasdaq: ERIC), which is now being introduced to Cisco's customers in the enterprise IT community.

Cisco and Ericsson unveiled a broad, deep partnership to serve service providers in a surprise announcement in November 2015. (See Cisco & Ericsson Forge Killer Partnership and Cisco + Ericsson: From Soup to Nuts.)

Since then, the two companies have been mostly quiet about the deal, although they did speak out at Mobile World Congress in February. There, they announced a 5G-ready router, jointly developed by the two companies in conjunction with Intel Corp. (Nasdaq: INTC) and Verizon Communications Inc. (NYSE: VZ), as well as the jointly developed Ericsson Dynamic Service Manager, for managing transport services, initially focused on multivendor mobile backhaul networks, inter-data center connectivity and enterprise VPNs. They also did a few joint keynotes and presentations during the event. (See Cisco Struts Virtual Mobile, 5G & Ericsson Partnership at MWC.)

The two companies had more to say to Light Reading here at Cisco Live, the router vendor's annual gathering of enterprise customers, with 28,000 attendees.

Martin Zander, VP, group strategy programs at Ericsson, told Light Reading that the two companies chose to partner rather than merge because partnering would be faster than clearing the regulatory hurdles for a merger. They wanted to work fast to achieve goals of innovation, growth and speed.

The two companies are working together in more than 180 countries, with "well over 200 active deal engagements" and a number of customer wins together, said Doug Webster, VP of service provider marketing at Cisco. (In February, the two companies said they had nearly 200 customer engagements "resulting in multiple customer wins," so the the story hasn't changed too much.)

The partnership combines Cisco's IP portfolio, Ericsson's mobile and radio lines, and services, Webster said.

As part of the partnership, Ericsson and Cisco are offering IP core solutions based on Cisco products and Ericsson services, as well as mobile backhaul and fixed broadband, and VPN, NFV and Cisco's security assets.

The deal initially targeted service providers, but has expanded to involve enterprises as well. On the enterprise, the partners are currently focused on Internet of Things, smart cities, transportation and utility verticals.

"IoT in particular is a greenfield market where opportunities are broad and open," Zander said. The market hasn't yet been defined, leaving plenty of room for growth, and separate use cases are emerging for industrial, consumer, smart cities and -- within the consumer space -- individual connectivity, the smart home and the smart car.

For example, smart cars provide manufacturers with the ability to build a relationship with the car owner that extends the life of the car, and to also build relationship with the new owner of a car after it's been sold as used, Zander said.

During the long, relative quiet following the merger announcement, Cisco and Ericsson were working behind the scenes on combining their personnel, products and services. "People underestimate the amount of work that needs to be done once you've done an announcement like this," Zander said. Ericsson has 115,000 employees and Cisco has 72,000; those are big teams to get working together. Some 66,000 Ericsson employees and 11,000 from Cisco are directly working on joint products and sales. Some 1,100 Ericsson engineers are certified on Cisco products.

The two companies also needed to establish a governance process.


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Daily management is handled by a joint deal desk comprising senior officials from both companies, as well as engineering. "That joint deal desk is managing problems that come up between the two organizations," Zander said. The desk decides on a daily basis who will take the lead on individual deals, and where the two companies might compete for business. Additionally, the two companies have monthly CEO meetings.

"I've been to Stockholm four times in the seven months since the announcement," Webster said. Zander has been to Cisco offices about the same frequency.

Despite initial success, the companies feel pressure to move faster, to meet market pressures, merging processes and portfolios to build joint value propositions, Webster says.

And speed is indeed necessary. The companies face fierce competitive pressure from Nokia Corp. (NYSE: NOK), which recently completed its Alcatel-Lucent acquisition, as well as the Chinese juggernaut Huawei Technologies Co. Ltd. In addition, some of the biggest and most agile network operators in the world -- hyperscale players such as Facebook and Google (Nasdaq: GOOG) -- are using open source and homemade products rather than buying products from traditional vendors. It's a scary world for those traditional vendors, even entrenched market leaders such as Cisco and Ericsson, which will be grateful to come home to each other's loving embrace after a day's doing battle in the violent marketplace.

— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, Editor, Light Reading Enterprise Cloud.

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