Network specialists Ericsson and Cisco on Monday announced plans to co-develop “the networks of the future” in a partnership that is expected to rake in an extra $1 billion in revenue for each company by 2018.
According to a joint press release, the multi-faceted agreement will include collaboration on “routing, data center, networking, cloud, mobility, management and control and global services capabilities.” The goal, the companies said, is to offer customers an end-to-end product and service portfolio, highly secure technology and acceleration of platforms that will enable smoother digitization across the 5G, cloud, IP and Internet of Things network architectures.
The companies said the partnership is strengthened by multiple supporting agreements, including a joint development and reference architecture agreement, a broad reseller agreement and a FRAND (fair, reasonable, and non-discriminatory) policy agreement. Additionally, the deal will see Ericsson receive license fees from Cisco.
“With the pace the market is moving, the successful companies will be those who build the right strategic partnerships to accelerate innovation, growth, and customer value,” Cisco’s CEO Chuck Robbins said in a statement. “Today’s announcement brings together two visionary industry leaders, with complementary cultures and track records of innovation. We have worked with Ericsson during the last year on developing a strategy for future industry leadership, and can start executing together today. Our partnership will drive growth for both companies, unique value for our customers, and incredible innovation for the industry.”
In Monday’s release, the companies said they expect the partnership will be a “key driver of growth and value over the next decade.” Incremental revenue generated as part of the venture is expected to begin in 2016 and steadily increase to $1 billion or more for each company by 2018.
Industry players like AT&T and Verizon welcomed the news in prepared statements Monday, heralding the partnership as a possible game-changer.
“This global partnership has the potential to reshape the industry,” Verizon Communications EVP and Chief Information and Technology Architect Roger Gurnani said. “We are excited about working with Ericsson and Cisco, and look forward to a partnership that will accelerate the development of new wireless technologies.”
Between the two companies, Ericsson and Cisco have more than 76,000 employees, access to $11 billion in research and development investments and more than 56,000 patents.
In the third quarter 2015, Ericsson posted $365 million in net profits and a 3 percent rise in sales to $6.8 billion. For the quarter ended July 25, 2015, Cisco reported revenues of $12.8 billion for an increase of 4 percent year over year and a net income of $2.3 billion for just over a 3 percent increase year over year.