Ericsson purchased Cradlepoint, for $1.1 billion. The move gets the company directly into the growing enterprise-based 5G market...
Ericsson’s acquisition of Cradlepoint should silence the detractors who have been suggesting for some time that the Swedish group has been neglecting the enterprise sector for too long in favor of other 5G opportunities.
Cradlepoint focuses on LTE/4G/5G indoor and private network wireless access and mobile wireless WAN (wide area network) edge solutions.
Ericsson paid $1.1 billion in cash for the Boise, Idaho-based company that has been a long-term but low-key partner of the Swedish telecommunications infrastructure supplier.
Cradlepoint has an impressive line-up of cellular and Wi-Fi access points, accompanied by cloud-based management software. Its solutions are specifically designed to operate in local areas, including inside buildings and factories and private and campus networks.
The latest accounts suggest the company’s turnover has been growing at 25-30% annually, whereas Ericsson’s traditional infrastructure business is achieving significantly slower growth in an admittedly hugely competitive market.
In the announcement of the deal last Friday, Ericsson flagged the fact that there is very little overlap between the two businesses. Cradlepoint sells mainly 4G and 5G-enabled optimized routers directly to enterprise customers and channel partners, so would represent an entirely new line of operation for the Swedish infrastructure group that sells predominantly to global wireless network operators.
The companies also stress that the vast majority of Cradlepoint’s business is in the US. Cradlepoint claims to have some 20,000 customers for its WAN set-ups, with many serving public safety agencies and emergency services. In a statement the company stressed that “first responders, IoT devices and payment machines that are today connected wirelessly are typically using a Cradlepoint solution running on LTE. Now they are selling 5G as well.”
It has recently started looking further afield, and has secured a deal with UK operator EE that will connect emergency services and public transport operations.
And in Australia, it is working with local mobile network operator Telstra around IoT and edge-computing networks for enterprises.
To date, Ericsson has been reluctant to sell products and solutions directly to enterprise customers, concerned this may alienate relationships with its myriad of global mobile telcos.
Its main competitors, Huawei and Nokia, have been much less wary of using this approach where necessary or appropriate. Indeed Scandinavian rival Nokia has, over the years, built a successful unit focusing on delivering private networks to a host of different organizations from factories to large corporations.
Ericsson’s strategy shift clearly makes sense, as an increasing number of large organizations are opting to run their own networks. It is a well-conceived acquisition and will definitely offer opportunities for the US company to expand quicker in overseas markets.
Having said all that, the Swedish group stressed that it plans to run Cradlepoint’s operations as a stand-alone unit.
During a conference call following the announcement, Börje Ekholm, Ericsson’s relatively new president and CEO commented: “We used to selling ….to a few customers. In the enterprise space, it is almost the opposite — you are selling readily standardized or industrial solutions to many customers. That’s why we need to make sure we keep the go-to-market organization in Cradlepoint intact.
“And that is something we can build on for other types of enterprise use cases as well. You will see us more today not competing in specific verticals, trying to [deliver] vertical solutions and instead providing connectivity and solutions.”
However, there were few specific details about any combined marketing approaches, or how any synergies would be exploited.
The deal is the largest to date under Ekholm’s stewardship at Ericsson. His predecessor, Hans Vestberg, also started his tenure making some acquisitions aimed at moving into adjacent markets.