Ericsson acquisitions build compelling portfolio to become leader in multimedia and shape the future of mobile and broadband internet communications.
In the last six months alone, Ericsson has been on a global buying spree, acquiring companies Entrisphere, Redback, Mobeon, Drutt, and Tandberg Television. Early in 2006, Ericsson purchased one of telecoms industry grandfathers, Marconi and locally in Australia, purchased systems integrator TUSC.
Ericsson Strategic Marketing Manager, Kursten Leins, explains the company's strategy behind the purchases is to enable any where, any time communications for operators so they can serve an increasingly demanding and tech-savvy consumer.
"When the internet first came about, people likened it to consumers getting off the bus (television) and into their own cars. Well, people have been driving for a few years, and now they all want Ferraris. And they want to do more than just drive!
"Consumers today have more control than ever and are demanding new levels of service, including faster broadband speeds, and new types of services, including VoIP, IPTV, and mobile broadband. This means it's getting more challenging and complex for operators, and broadcasters.
"In this dynamic environment, you either partner, acquire or merge. Through Ericsson's strategic acquisitions of leading multimedia and network technology companies, we are enabling new multimedia services and whatever, whenever communications. Ericsson is uniquely positioned to provide operators around the world with comprehensive multimedia, mobile communications solutions."
The acquisitions round out Ericsson's portfolio for providing broadband access to meet the growing demands for increased bandwidth. This includes products and solutions across charging and billing, video on demand, encoding, IP Based Voice and Mail and an out of the box mobile service delivery platform. On the access side it includes multi service edge routers, optical transport and broadband access and fibre access.
Significant Investments already paying off
While exact figures for the acquisitions haven't been released, Ericsson has spent billions to acquire the companies mentioned. The acquisition of Tandberg alone was a $1.4 billion all cash offer. And the investments are already paying off.
Just out of the gate, Ericsson has secured its first major win in North America. AT&T chose Ericsson to provide equipment for the planned deployment of Gigabit Passive Optical Network (G-PON) - a high speed fiber optic network capable of high-density, high-bandwidth service delivery, including IP-based video services to homes throughout the US.
Acquiring Silicon Valley-based Entrisphere in 2007 provided Ericsson with a leading, "purpose-built" GPON platform technology key to the AT&T contract.
"Each acquisition plays a significant role in our multimedia and full service broadband strategy, and a win like the AT&T contract tells us we have placed our bets well and confirms Ericsson's status as a leader in next generation fixed broadband," added Kursten.
About Ericsson
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Acquisitions at a glance
Marconi
In October 2005, Ericsson announced the acquisition of 75 per cent of Marconi's assets. Ericsson was seeing a convergence between fixed and mobile networks and forecasting a 'hockey stick' curve for transmission capacity in telecom networks. Marconi's competitive transmission offerings, especially in optical systems, combined with Ericsson's strong microwave radio position and worldwide sales organization create a solid foundation for growth.
Ericsson's fixed network business combined with Marconi's broadband access offering and Marconi's long-standing relationships with leading fixed operators, including important key customer relationships like British Telecom, Telefonica, Telecom Italia, Deutsche Telecom, reinforce Ericsson's market position.
TUSC
In November 2005, Ericsson Australia acquired the Australian company TUSC. With around 100 employees, TUSC specializes in systems integration for telecommunications, utilities and enterprises. TUSC was a subsidiary company of Allied Technologies Group, listed on the Australian stock exchange. The acquisition illustrated Ericsson's ambition to further strengthen and develop its leading position within telecommunications services and the focus areas of systems integration, telecom management and operational support systems (OSS). The TUSC acquisition also allows Ericsson to diversify its customer base into the closely-related utilities sector.
Redback Networks
With its US$1.6 billion acquisition of Redback in 2006, Ericsson positioned itself as an IP market leader at a time when an increasing number of operators are moving to all-IP networks.
The combination of Redback Networks' intelligent-routing technology and Ericsson's leading IMS (IP Multimedia Subsystem), optical transport and broadband access offers a coherent end-to-end all-IP solution for both fixed and mobile operators.
Ericsson gained a proven IP edge routing as well as a BRAS platform to leverage in its offerings for mobile and fixed broadband networks. Redback accounted for 14.1 per cent of the BRAS revenue market share in 2006 and the Redback SmartEdge 1200 was the world's first million subscriber rack for triple-play services such as HDTV, HD VoD and Broadband Mobility. The product also recently won the NXTcomm 2007 Eos award for technology innovation in content delivery and management.
Entrisphere
Just weeks after the Redback acquisition was announced, Ericsson purchased fellow Silicon Valley resident, Entrispehere.
Entrisphere provides broadband-access solutions to major telecom carriers in North America. Its flagship product is the BLM 1500 GPON system and the T-Series of Optical Network Terminals, which was named in the recently announced AT&T contract (see press release). Entrisphere was founded in 2000 and is headquartered in Santa Clara, California.
Tandberg Television
The Tandberg TV acquisition will allow Ericsson to tackle the lucrative IPTV market and expand Ericsson's customer base to include cable and satellite operators as well as broadcasters.
Tandberg's products and services complete Ericsson's portfolio for delivering IP-based services such as VoIP, IPTV, and VoD. Ericsson is now the only vendor among chief rivals (i.e., Alcatel-Lucent, Microsoft TV, Cisco, Motorola, and Nokia Siemens) to offer a complete in-house portfolio that includes the following components: video head-end, middleware systems, VoD platform, and content distribution management, systems integration, and telecom infrastructure solutions.
Mobeon
With its acquisition of leading supplier of IP-based voice and video mail Mobeon in March 2007, Ericsson is targeting traditional networks as well as IMS-based and converged networks, and expects to grow the messaging area by bringing an innovative approach to traditional voicemail.
Mobeon produces the key component of Ericsson's Messaging over IP (MoIP) solution - an IP-based voice and video-mail solution for telecom operators. The largest MoIP installation has more than 26 million mailboxes, making it the largest IP-based voicemail system in the world.
Mobeon has 130 employees in Sweden and the UK; all will be integrated to Ericsson's multimedia division.
Drutt Corporation
Just last month, Ericsson announced it signed an agreement to acquire 100 per cent of the shares of Drutt Corporation, a world leading provider of Service Delivery Platform (SDP) solutions.
Drutt's flagship solution - MSDP (Mobile Service Delivery Platform) offers an end-to-end multi-channel solution for establishing a profitable mobile service delivery business helping operators mobilize and charge for any content to any kind of mobile device, over any mobile network and delivery channel.
Drutt's MSDP is commercially deployed in more than 60 telecom operators in 35 countries, managing millions of transactions every day. Drutt Corporation has subsidiaries in Sweden, China, Canada and Mexico.
