For this vignette of a recent episode of the Futurum Tech Webcast, part of the 5G Factor series, analysts Ron Westfall and Shelly Kramer explore the meaning of the Ericsson $6.2 billion acquisition of Vonage now that the U.S. government approved its finalization.
Their discussion highlighted:
- Why the Vonage communications platform capabilities align with 5G standalone capabilities that are becoming more widespread such as using 5G core programmability, granular policy capabilities to deliver, for example, enhanced collaboration capabilities that are specific to operator monetization goals.
- How Vonage’s expertise with APIs can allow operators to create what can be characterized as federated services that enlist the cooperation of other operators in developing inter-carrier exchanges to better serve enterprise customers with a multi-regional or global presence.
- Through the Vonage API Platform and related assets, Ericsson can help drive operators to take advantage of the vast developer community and API management tools, to build innovative applications that work specifically to 5G networks.
- With the Vonage API Platform on board, Ericsson expands its portfolio capabilities support service providers in their mission to fulfill fast evolving enterprise requirements with 5G enhanced services such as advanced CPaaS, UCaaS and CCaaS capabilities and cloud communications, that can also align with emerging SASE architectures aimed at integrating the administration and security of distributed workforce and workspaces with existing organization-wide headquarters and branch office implementations.
Ron and Shelly believe Ericsson is making the right move in acquiring Vonage at the $6.2 billion price tag contrary to naysayers who view Ericsson as overpaying for Vonage as well as questioning any post-integration synergy gains. As such, Ericsson is broadening its portfolio to support the network capabilities that enterprises can consume and pay for through open network APIs, powering more innovation advances across the 5G ecosystem.
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Transcript:
Shelly Kramer: The US approved Ericsson 6 billion dollar Vonage acquisition. This merger is actually expected to wrap this week ahead of its originally forecasted completion by the end of July.
This move by Ericsson, we believe is a smart one, expanding into new business by way of scooping up a company that focuses on something completely different from what Ericsson does actually. And Vonage was a pioneer in this space, but today the company is providing businesses with internet-based communication services for customer service and other use cases. And so, I see this as a smart diversification move and really look forward to seeing what Ericsson is able to do here. And so congrats to everyone on that front.
Ron Westfall: Yes. That I think is resonating more with the audience out there. There are still some skeptics about the deal, the size of deal, over 6 billion dollars.
Shelly Kramer: Yeah, it’s a big deal.
Ron Westfall: Yes, literally, and again, it’s about execution. How far can Ericsson really take the Vonage assets and make it integral to enabling the service providers to monetize the 5G networks, to make conductivity more experienced, enhanced, and so forth? And I think the synergies are there. And I think it’s aligning with what we just already talked about, is that the Vonage communications platform capabilities align with 5G standalone capabilities that are becoming more widespread. For example, using 5G core programmability, granular policy capabilities to deliver, for example, enhanced collaboration capabilities that are operator specific.
And so what the impact there is that this is allowing operators to have more value in terms of the 5G ecosystem that they’re already integral to, so that they are not going to be as reliant on using cloud partners to get more applications out there. And this is where Vonage’s expertise really comes in because they have the APIs to allow operators to create what can be characterized as federated services. That is… it’s great for, let’s say, a T-Mobile or Verizon to offer this great 5G service to, say, a enterprise, but that enterprise has global presence, remote workers in Asia, branches in Europe, so how does that work?
Well, you have to have these APIs enable inner carrier exchanges to deliver the innovation, so all the operators that are partnering in this benefit. But what’s equally important is that they’re leveraging this vast community of developers. And so Vonage kind of catalyzes the ability of Ericsson to allow the operators to take advantage of that vast developer community, to make these type of applications work specifically to 5G networks.
And so I think what’s also important to note is that, yes, to date Vonage is focused on connectivity, and that is enabling what could be characterized as over the top capabilities, but Ericsson does have a near-term balancing act, as to making sure that the Vonage capabilities are benefiting their core communication service provider customer base, and it’s not say a separate Vonage revenue stream that kind of leaves the operators, not in so much in the monetization loop.
But what I think is also important is that when it comes to offering enterprises these 5G enhanced services such as advanced collaboration capabilities and so forth, is that aligns with what we also touched on say, sassy architectures, which we know will be important because of the work-from-home transformation that’s occurring, at least distributed workforce and workspaces being the dominant way for many organizations to support their workforce. And so it’s not just about having an NPLS connection between the headquarters and a branch office anymore. It’s about making sure that your work-from-home employee is not going to be a security vulnerability.
So you need those granular policies that enable a work-from-home employer, wherever they are, to be able to go into the corporate network and using 5G capabilities and having all these built-in security assurances and so forth. So this is lining up, I think, overall to really allow Ericsson to enable the service providers out there to become more innovative, to really take 5G monetization to another level and really make their 5G investments pay off sooner.
The US approved Ericsson 6 billion dollar Vonage acquisition. This merger is actually expected to wrap this week ahead of its originally forecasted completion by the end of July.
This move by Ericsson, we believe is a smart one, expanding into new business by way of scooping up a company that focuses on something completely different from what Ericsson does actually. And Vonage was a pioneer in this space, but today the company is providing businesses with internet-based communication services for customer service and other use cases. And so, I see this as a smart diversification move and really look forward to seeing what Ericsson is able to do here. And so congrats to everyone on that front.
Ron Westfall: Yes. That I think is resonating more with the audience out there. There are still some skeptics about the deal, the size of deal, over 6 billion dollars.
Shelly Kramer: Yeah, it’s a big deal.
Ron Westfall: Yes, literally, and again, it’s about execution. How far can Ericsson really take the Vonage assets and make it integral to enabling the service providers to monetize the 5G networks, to make conductivity more experienced, enhanced, and so forth? And I think the synergies are there. And I think it’s aligning with what we just already talked about, is that the Vonage communications platform capabilities align with 5G standalone capabilities that are becoming more widespread. For example, using 5G core programmability, granular policy capabilities to deliver, for example, enhanced collaboration capabilities that are operator specific.
And so what the impact there is that this is allowing operators to have more value in terms of the 5G ecosystem that they’re already integral to, so that they are not going to be as reliant on using cloud partners to get more applications out there. And this is where Vonage’s expertise really comes in because they have the APIs to allow operators to create what can be characterized as federated services. That is… it’s great for, let’s say, a T-Mobile or Verizon to offer this great 5G service to, say, a enterprise, but that enterprise has global presence, remote workers in Asia, branches in Europe, so how does that work?
Well, you have to have these APIs enable inner carrier exchanges to deliver the innovation, so all the operators that are partnering in this benefit. But what’s equally important is that they’re leveraging this vast community of developers. And so Vonage kind of catalyzes the ability of Ericsson to allow the operators to take advantage of that vast developer community, to make these type of applications work specifically to 5G networks.
And so I think what’s also important to note is that, yes, to date Vonage is focused on connectivity, and that is enabling what could be characterized as over the top capabilities, but Ericsson does have a near-term balancing act, as to making sure that the Vonage capabilities are benefiting their core communication service provider customer base, and it’s not say a separate Vonage revenue stream that kind of leaves the operators, not in so much in the monetization loop.
But what I think is also important is that when it comes to offering enterprises these 5G enhanced services such as advanced collaboration capabilities and so forth, is that aligns with what we also touched on say, sassy architectures, which we know will be important because of the work-from-home transformation that’s occurring, at least distributed workforce and workspaces being the dominant way for many organizations to support their workforce. And so it’s not just about having an NPLS connection between the headquarters and a branch office anymore. It’s about making sure that your work-from-home employee is not going to be a security vulnerability.
So you need those granular policies that enable a work-from-home employer, wherever they are, to be able to go into the corporate network and using 5G capabilities and having all these built-in security assurances and so forth. So this is lining up, I think, overall to really allow Ericsson to enable the service providers out there to become more innovative, to really take 5G monetization to another level and really make their 5G investments pay off sooner.
Author Information
Ron is an experienced, customer-focused research expert and analyst, with over 20 years of experience in the digital and IT transformation markets, working with businesses to drive consistent revenue and sales growth.
Ron holds a Master of Arts in Public Policy from University of Nevada — Las Vegas and a Bachelor of Arts in political science/government from William and Mary.
