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Networks & Infrastructure
FMC’s Siren Call Snags Ericsson, Redback
Swedish Vendor Set To Pay $2.1 Billion For Silicon Valley Start-up
by Jim Barthold
The lure of IP-facilitated fixed-mobile convergence (FMC) has
led Ericsson to extend a $2.1 billion tender to acquire
Redback Networks and fold the Silicon Valley start-up’s multi-
service routing platform into a new IP-based technology
strategy.
In announcing the acquisition, Ericsson President-CEO Carl-
Henri Svanberg acknowledged that “Accelerated IP
deployments are important for operators moving towards IP
and … the triple play that’s being implemented today in the
wireline fixed networks is coming also in the wireless and
mobile networks in the future.”
The combination, he said, “will require intelligent, high-
capacity routing technologies that we know Redback is on the
edge of. The technology and the knowledge that Redback has
and our experience in carrier class telecom networks really
makes this combination a very good base going forward.”
It’s somewhat of an odd couple – the staid Swedish vendor
which is a leader in the wireless space and the brash Silicon
Valley start-up which has been hammering away at
transforming the telecom network from switches to routers
and from ATM to IP and eventually carrier Ethernet. The
pairing will succeed because Redback will maintain its identity
and traditional way of doing business, said Kevin DeNuccio,
president-CEO of Redback Networks while sucking up some of
Ericsson’s money.
“We’ll really be positioned to capture the leading market
share in the multiservice edge router market. This is going to
accelerate both customer acquisition and deployment
capabilities around the globe (Ericsson has a presence in 140
countries) and really create the best positioned company to
support wireline carriers for the triple play deployments that
we’ve been doing.”
Ultimately, he said, the merged company will “look to bring
wireline and wireless networks together seamlessly.”
Separately, though, FMC was more vision than reality for
Redback and Ericsson. Redback lacked the money and
Ericsson lacked the IP expertise.
“Customers, even though they have selected us, continue to
move cautiously understanding that we didn’t have the reach
and resources of a company of the magnitude like Ericsson,”
DeNuccio said. “We’ve constantly been sensitized by our
customers that ultimately they had to go a little bit more
slowly than they would have liked given our size and our
ability to scale at a certain pace.”
On the other side of the ocean, Ericsson has been watching
the industry’s quick-step movement to IP and the way that
was bringing together formerly disparate wireline and wireless
elements.
“We want to make it possible for Redback to accelerate the
product development within their operation and want to utilize
and merge the Redback technologies in the IPO area into
Ericsson products going forward. They most likely will be an IP
and routing element in most of our products going forward,”
said Svanberg.
"And, they most likely will be the replacement for the
traditional class 5 switch," he added.
“When you deploy IP into the fixed and mobile networks and
the converged networks going forward, we see the edge going
out towards the access and the base station,” Svanberg said.
"That opens up an opportunity for Redback to expand its
base – with the help of some Swedish cash," said DeNuccio.
“We have plans to build some very big and high scale routers
in the future, which, given our current capacity today, could be
core routers in wireless networks. We are just naturally on a
path to grow our capacity and capabilities,” he said. “We’ve
licked the most complicated part in terms of software; we just
have to continue to expand our bandwidth and portfolio.”
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