Cisco Systems, Inc. (NASDAQ:CSCO) and Swedish Telecom giant Ericsson have announced a mega partnership that is sure to shake up the networking industry. The collaboration between the research and development teams of the two companies is expected to speed up the introduction of 5G wireless connections.
The collaboration can be seen as a way to combat the increasing competition in the arena of networking industry and the rapidly changing landscape due to mobile and cloud computing. The demand for faster networking can also be one of the reasons for the collaboration. Earlier Dell Inc. (NASDAQ:DELL) acquired EMC for $ 67 billion to create a new data management and networking giant. Other companies have also been beefing up their networking and data services so the move by Cisco and Ericsson is not unique or that unexpected.
The partnership was announced by the CEO’s of both the companies and has been described as a very special partnership by them. One of the major goals of the collaboration is a $1 billion increase in sales for both the companies by 2018.
The announcement of the mega partnership however does not seem to have changed the bearish outlook the market has on Cisco Systems, Inc. (NASDAQ:CSCO)’s shares. The company’s shares have been declining in value since the company declared its first quarter earnings for first quarter of 2016. The decline can be attributable to the slowdown of Cisco’s switch & routing divisions which is the main division at Cisco in terms of revenue.
The partnership with Ericsson could help Cisco to change the fortunes of its struggling switch & routing divisions as Ericsson could help Cisco increase its worldwide sales and also counter the threat posed to Cisco Systems, Inc. (NASDAQ:CSCO) by white box manufacturers. The partnership could also accelerate the development of new technologies that will help both companies beat their competitors.