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Here's Why Ericsson and Cisco Are Teaming Up on Mobile

Ericsson CEO Hans Vestberg explains the partnership in an interview with Re/code.

Screenshot by Re/code

Ericsson and Cisco announced a big tie-up on Monday, a cooperative arrangement they say will lead to $1 billion in additional revenue for each company.

Like a lot of partnerships between big companies, the announcement was long on adjectives and short on details on where exactly that added revenue would come from.

So we pressed Ericsson CEO Hans Vestberg for some more details.

Vestberg said the biggest pieces of the deal are Ericsson being able to sell Cisco’s products globally and offering managed services helping to implement Cisco gear.

“That’s two very tangible things we can deliver on tomorrow to our customers,” he said in a telephone interview. Ericsson, he said, does business in 180 countries and can take Cisco into new markets, opening up the possibility of added revenue for both companies.

The initial deal is mainly focused on selling to companies on Ericsson’s home turf — wireless service providers like AT&T, Verizon and Vodafone. Over time, the two companies are also going to work together on pitching business customers, where Cisco is traditionally strong, as well as on projects involving the Internet of Things and smart cities.

The two companies are also taking a license for each other’s patents, with Ericsson getting some revenue from Cisco on patents. “It’s not any huge amount,” Vestberg said, noting that Cisco also has a lot of patents.

To hear more from Vestberg on the future of 5G and more, here is his interview from the recent Code/Mobile conference.

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