It’s turning into a busy pre-holiday rush in the UCaaS space. Following BCM One’s acquisition of CoreDial last week, Swedish telecom vendor Ericsson has just acquired Vonage for a hefty $6.2 billion price tag (News - Alert).
There’s a big difference between the two deals. While the former is a logical extension of a clearly defined acquisition strategy in the space, the latter is the first foray into the communications services space for what has traditionally been a service provider business. But, when considering Ericsson’s acquisition of Cradlepoint about a year ago, its vision for the wireless enterprise as the model of the future, and its existing role in the 5G ecosystem, this deal makes a lot more sense, especially in the context of a converged mobile, cloud, and communications world. The move is the next step in Ericsson’s (News - Alert) wireless enterprise strategy – a market expected to reach $700 billion by 2030.
“The core of our strategy is to build leading mobile networks through technology leadership. This provides the foundation to build an enterprise business,” says Börje Ekholm, President and CEO of Ericsson. “The acquisition of Vonage (News - Alert) is the next step in delivering on that strategic priority. Imagine putting the power and capabilities of 5G, the biggest global innovation platform, at the fingertips of developers. Then back it with Vonage’s advanced capabilities, in a world of 8 billion connected devices. Today we are making that possible.”
Communications is the core of any business – the past two years have shown how critical cloud communications is to business success. The deal brings more than 120,000 business customers to Ericsson, along with access to more than a million developers, who are already embedding various communications tools into their applications and products. That existing customer base will now also have access to an entire world of wireless.
Vonage’s platform will also provide a platform for Ericsson’s service provider customers to deliver greater value to their business clients under a white-label model and other cross-selling opportunities, leveraging Vonage’s communications APIs and existing vertical presence. The CPaaS market is expected to grow to $22 billion by 2025. That growth, combined with Vonage’s APIs and Ericsson’s 26,000 developers, will provide a solid foundation for capitalizing on existing and new use cases leveraging a combination or mobile and communications technologies. Many think the 5G market has not moved as quickly as it could – and should – have. This move can help Ericsson drive momentum in the 5G space, as well.
If there was any doubt, the past two years have made it clear that digital transformation and a mobile- and cloud-driven strategy is the future of business. The healthcare and education industries could not have survived the past two years without modern technologies, the gaming market has been on a constant upward trajectory, and the autonomous vehicle space continues to evolve.
This is just the beginning, and new use cases and models will continue to emerge. Ericsson intends to be in the middle of that evolution, offering operators, developers, and businesses a global platform for open network innovation built on Ericsson and Vonage solutions.
This is a huge deal – not only because of the purchase price, but because it takes the meaning of convergence to a new level. It creates a unique ecosystem that includes cloud communications and wireless technologies, developers, and both enterprise and service provider customers.
Vonage will become a wholly owned subsidiary of Ericsson, with Vonage’s employees remaining with the company and Vonage CEO Rory Read joining the Ericsson executive team, reporting to Ericsson CEO Börje Ekholm.
Edited by Erik Linask