What Redback acquisition means to Ericsson

US$2b puts Ericsson in direct competition with some of its biggest partners

With its US$2 billion (AUD$2.55 billion) acquisition of Redback Networks this week, Ericsson is now in direct competition with some of its biggest partners -- Cisco and Juniper -- in the red-hot carrier edge routing market. However, the company says the move is more of an effort to obtain IP and Ethernet technology it can use to pull its telecom and mobile infrastructure products forward into the IP-based future of telecom, says Karl Thedeen, vice president of wireline products for the Swedish vendor. But that's not to say Ericsson isn't looking to grow Redback's market share and technology itself. Thedeen expanded on the merger this week with Phil Hochmuth. [The following is an edited transcript.]

What does Ericsson get with its US$2 billion Redback acquisition?

IP routing has been a hole in our portfolio. What we've looked for is a product like this, which fits into the heart of the IP network, with the possibility to add applications. [Redback's products are] not only a payload and routing platform, but something that can host advanced services -- applications such as security, quality of services and deep packet inspection.

What we want to do is scale the technology, so we can address more parts of the routing market. We also believe that we'll be able to use Redback's [technology] in other Ericsson products, such as our softswitch and IMS products, as well as DSL access and our range of [mobile] base stations. The growing importance is to add IP and Ethernet capabilities into those products.

How might Ericsson products incorporate Redback technology, or vice versa?

If you take VoIP applications, there are session border gateways and other functions that we believe you need to build closer to routing. If you take voice applications, or IPTV applications, they would run on severs. But [parts of those] could work on routers, in areas where some of that traffic manipulation and understanding of IP flows is necessary.

Other things such as proxy functions in IMS, we'll look into whether we should run those things on a [Redback platform], or keep them on their existing platforms. We won't load the entire IMS application suite onto [a Redback product].

How will the deal affect your partnerships with Cisco and Juniper, which are the leaders in the carrier edge router market?

Cisco and Juniper are important parts of our offerings, because of their installed base and the breadth of their portfolios. With Cisco, we have an arrangement on the wireline side, and with Juniper, we have a co-development effort for [General Packet Radio Service and 3G routers]. We intend to keep both partnerships. We think Cisco and Juniper are very important for our ability to act as a solutions provider. And our systems integration people often use their products. We don't foresee any changes in those relationships.

Even though you will be competing directly with Cisco and Juniper for carrier edge router deals?

That will add [some factors] that we will need to have in mind when we cooperate with Cisco and Juniper. On the other hand, there will be a lot of opportunities where this will not be hindering us at all. For example, if we integrate our softswitch technology into a Juniper core routing environment, it's very important for us and Juniper to have a good partnership so we can make that work.

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