As massive mergers reshape the technology industry, Cisco and Ericsson opted instead to team up in order to tackle the rapidly changing networking market.
The networking giants on Monday announced a wide-ranging business and technology partnership that combines their capabilities in routing, data center networking, cloud computing, and services to target service provider and enterprise networks.
The companies billed their partnership, which includes joint development, a reseller agreement and collaboration in key emerging markets, as creating networks of the future as mobility, cloud and the Internet of Things drive new requirements.
The Cisco-Ericsson deal, which executives said was a year in the making, comes as Nokia prepares to finalize its $17.6 billion purchase of Alcatel-Lucent. The merger combines the companies' capabilities in fixed and mobile broadband, IP routing, core networks and cloud.
The Cisco-Ericsson partnership also comes in the wake of Dell's proposed acquisition of EMC.
On Monday, Cisco and Ericsson executives said the partnership provided a better means to meeting rapidly changing customer needs than M&A. "We think partnering gives us that ability more than a big acquisition, which can bog you down quite a bit," Cisco CEO Chuck Robbins said in a video posted to Cisco's website.
Cisco and Ericsson estimate that their partnership will drive $1 billion in revenue for each by 2018. The companies have a combined 56,000 patents and $11 billion of R&D investment across 180 countries.
The pair plan to work together on a software-defined networking and network functions virtualization initiative.
Earlier this year, Cisco unveiled a strategic partnership with another technology heavyweight, Apple. The companies said they'll collaborate on making Cisco networking equipment handle data for Apple devices more efficiently.