A joint development pact between mobile and smartphone communications giant Ericsson and enterprise networking leader Cisco could be a potential Internet of Things game-changer.
Cisco and Ericsson said the partnership will generate incremental sales in 2016 for both companies, ramping to US$1 billion or more for each by 2018.
Under the far-reaching pact, Ericsson, a US$33.3 billion global mobile communications powerhouse, and Cisco, the US$49.2 billion enterprise networking behemoth, are going to team on joint development centered on next-generation service provider networks and new platforms and services around IoT.
The first order of business for the two companies is a joint initiative centered on software-defined networks (SDN) and network functions virtualisation (NFV) – hotly contested markets where Cisco is facing increasing competition from Hewlett Packard Enterprise and Dell.
"Initially the partnership will focus on service providers, then on opportunities for the enterprise segment and accelerating the scale and adoption of IoT services across industries," said Ericsson chief executive Hans Vestberg in a prepared statement.
"For Ericsson, this partnership also fortifies the IP strategy we have developed over the past several years, and it is a key move forward in our transformation."
Cisco will pay licensing fees to Ericsson under a broad patent portfolio licensing agreement. The two companies say together they have a combined 56,000 patents and a combined R&D budget of US$11 billion.
The partnership is the result of a year's worth of work, said Cisco chief executive Chuck Robbins in a statement.
"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," he said.
The Ericsson pact follows the blockbuster Cisco struck with Apple in August aimed at providing tighter integration with Apple iPhones and iPads and Cisco enterprise collaboration products. Under the Apple pact, Cisco said it is teaming with the smartphone market leader to optimise Cisco networks for Apple iOS-based devices and apps.
Furthermore, Cisco said it will optimise collaboration tools like Cisco Spark, Cisco Telepresence and Cisco WebEx on iOS devices to deliver business services across mobile and cloud environments.
Lindsey O'Donnell contributed to this story. This article originally appeared at crn.com