Ericsson to Buy Vonage for $6.2 Billion

Ericsson has agreed to purchase Vonage’s cloud communications portfolio for $6.2 billion, in a major boost to its wireless enterprise services offering. 

Ericsson expects the move to benefit everything from telemedicine to immersive virtual education, by combining Vonage’s developer community and customers with its networking infrastructure, R&D and partnership ecosystem.

The Vonage platform enables voice and video calls over the internet, both as part of its stand-alone software and through integrations among third-party software components, known as applications programming interfaces.

From an IoT standpoint, it’s the APIs that are most exciting. Network APIs underpin broad messaging, voice and video capabilities for Ericsson’s customers – a mix of mobile networks and enterprises looking to overlay services on 4G and 5G bandwidth. 

Among Vonage’s APIs is a tool for embedding live video, streamlining not only the deployment of COVID-19 era remote technical support but also virtual audiences with Santa. These developers will get access to Ericsson’s 4G and 5G network APIs as part of the deal.

In addition, Vonage has toolkits for synergizing multiple communication channels and making operational improvements in customer contact centers. The whole portfolio is hosted in the cloud through Vonage’s Communications Platform, which Ericsson says accounted for 80% of overall company turnover.

The Vonage purchase follows Ericsson’s acquisition of Cradlepoint’s wireless access network technology for $1.1 billion to strengthen its 4G and 5G edge connectivity.

Ericsson subsequently unveiled a new product for intelligently orchestrating mobile access networks, promising optimized radio access network functionality across both 4G and 5G frequencies.

Company forecasts predict there will be $22 billion available by 2025 from a market that Ericsson calls “communication platform as a service,” with open network APIs reaching $8 billion in value by the end of this decade.

Ericsson’s head of 5G marketing is predicting continued growth of enterprise wireless protocols amid the retirement of legacy models like Public Land Mobile Radio, the pocket radio wavelength long trusted by mission-critical services.

Time will tell whether Ericsson has priced wireless enterprise growth correctly, but it has witnessed plenty of communications transformations since the company was founded in 1876. In 2008, for instance, the firm offloaded its private branch exchange service, a 1960s-era innovation that helped direct internal enterprise calls.

“Vonage’s strong developer ecosystem will get access to 4G and 5G network APIs, exposed in a simple and globally unified way. This will allow them to develop new innovative global offerings,” Ericsson’s CEO Börje Ekholm said.“Communication service providers will be able to better monetize their investments in network infrastructure by creating new API-driven revenues. Finally, businesses will benefit from the 5G performance, impacting operational performance, and share in new value coming from applications on top of the network.”