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Analysts back Ericsson and Cisco cooperation
On April 28, 2004 Ericsson and Cisco Systems announced that they will deliver jointly integrated solutions for carrier class IP-based wireline networks. Telecom analysts received the initiative as an important and positive market move.
May 28, 2004
"Operators have started to modernize their wireline networks to handle broadband and multimedia services," said Björn Olsson, head of Business Unit Systems. "The number of broadband connections to homes and offices is growing fast, and it's a clear sign that this market is taking off right now."
The decision to cooperate with Cisco may come as a surprise to people that are used to seeing Ericsson and Cisco competing head-to-head in the market for routing and switching equipment. But, said Björn Olsson, the pace of change in the market motivates a collaborative initiative like this.
One important driver is the continuing convergence of telephony, data and multimedia communications into unified multimedia networks, built on IP-technology. After some years of low investment levels, this process is now picking up speed.
Analysts were positive about Ericsson and Cisco's cooperation in the wireline area. The message is clear: it will benefit customers and the vendors.
"It's good to see a pragmatic approach instead of protectionism. I think it will pay off," said Martin Nilsson, an analyst at Carnegie Investment Bank, at Ericsson´s recent Capital Markets Day in Stockholm.
"I also think there is a pull from customers here. An operator like Telefònica welcomes cooperation between two of its major suppliers. It will speed up functionality and operator usage of its installed base."
Analyst Joe McGarvey of Current Analysis writes: "The partnership and reseller relationship is beneficial to both companies. As carriers move to modernize the PSTN, they will increasingly require holistic solutions that tightly integrate IP-oriented next-generation telephony gear with core IP routing equipment."
McGarvey also writes on the Current Analysis website that the market impact of the partnership is high on the issue of DSL access. "DSLAM rivals, such as Alcatel, UTStarcom, and Huawei, will need to adjust their product development and market messages to account for the Ericsson/Cisco alliance."
