Ericsson is deepening its cooperation with Cisco Systems, adding Wi-Fi products that could help Sweden's struggling maker of mobile networks land new customers.
Ericsson and San Jose, California-based Cisco, the largest maker of internet-network gear such as routers and switches, are adding Wi-Fi to a products pact first announced 14 months ago. The alliance allows both companies to sell more complete network systems to carriers and go after new customers like arenas and large shopping centers that need more robust networks to handle large crowds with mobile devices.
"By adding Wi-Fi solutions into the partnership, we will enable our customers to offer best-in-class Wi-Fi in their networks, complemented by our leading 3GPP portfolio and services organization," Ericsson's head of North America Rima Qureshi said in a statement.
The expanding Cisco venture provides Ericsson with crucial support as it struggles through an industry slump and competition with Nokia and Huawei Technologies. Rather than merge with an internet-gear maker, as Nokia did with Alcatel-Lucent last year, Ericsson has deepened ties with Cisco - each company has targeted $1 billion or more of new revenue from their venture by the end of 2018. Ericsson had previously said it would extend cooperation with Cisco to include datacenter switching and security.
As wireless carriers slow spending following the rollout of fourth-generation gear, their suppliers have looked for other ways to lift sales and prepare for a wave of connected devices that will require more-integrated networks. With Alcatel-Lucent, Finland's Nokia added internet protocol-based networks. China's Huawei has a broader product portfolio, gained through its own research and development.
Ericsson is betting the partnership will help it offer better products than its rivals in a changing network environment, and sell to customers other than its traditional telecom operator clients. Combining Ericsson's networks with Cisco's wireless LAN systems could offer better connectivity at stadiums where thousands of people access internet services simultaneously, for example. Cisco and Ericsson have completed more than 60 joint deals since founding their partnership, Ericsson said.
Those orders will pad the arrival of Ericsson's incoming Chief Executive Officer Borje Ekholm, who takes the helm this month after spending a decade on the company's board. Ekholm has been tasked with reviving the company's fortunes after a year in which it has ousted one CEO as it struggles to cope with lower demand for traditional mobile networks.
A cost-effective way to approach customers seeking converged gear, the tie-up will help both companies gain the advantages of scale without the complications of a large merger, Cisco and Ericsson executives have said.
Design and deployment of the solutions will be handled by Ericsson with product support from Cisco. The companies aim to let carriers offer access to Cisco's wireless local area networks to subscribers and direct users to the best available network through so-called real-time traffic steering.
© 2016 Bloomberg L.P.