No Jitter is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Ericsson Completes Vonage Acquisition

Reda Grubliauskaite Alamy Stock Photo.jpg

Image: Reda Grubliauskaite - Alamy Stock Photo
Ericsson announced its intent to acquire New Jersey-based Vonage Holdings for about $6.2 billion last November. It was an unexpected and intriguing announcement. Not only was it the Swedish vendor’s largest acquisition to date, but Ericsson had exited enterprise communications over a decade ago.
Ericsson has a long and distinguished history in communications. It played a pivotal role in the development of the telephone, PBX, and many other forms of modern enterprise communications. Several decades ago, the company shifted its focus to wireless communications; in 2008 sold its PBX business to Aastra (now a part of Mitel).
Ericsson’s core business is hardware and software used to operate a cellular network. While most businesses consume cellular services, they obtain them from cellular service providers—many of which are customers of Ericsson. By acquiring Vonage, Ericsson is signaling that it sees cellular and enterprise services coming closer together.
Now that the merger is complete, we will start to get more clarity over what Ericsson has in mind. I see two likely objectives: enterprise 5G and cellular UCaaS integration.
Enterprise 5G enables organizations to build their own private wireless networks with enhanced mobility, flexibility, reliability, and security. Ericsson likely intends to expand its enterprise sales capability, and Vonage plans to expand its portfolio.
Despite the term ‘unified’ in UCaaS, most enterprises have numerous communications providers. That may change with a new generation of UCaaS Mobility. The modern UCaaS suite includes telephony, meetings, and messaging, but not cellular.
At the Enterprise Connect conference last March, three keynote presentations highlighted UCaaS services working on mobile phones natively. This back-end integration eliminates the need for the user to install an enterprise UCaaS app and offers a higher quality, native-dialer experience. Essentially, it’s a single solution for mobile phones and enterprise UcaaS that allows administrators to assign users any combination of hard phones, softphones, and cellular phones.
The keynotes were from Cisco, Microsoft, and RingCentral. Microsoft presented a sneak peek at what Teams may do in the future, and RingCentral and Cisco demonstrated available products (AT&T Office@Hand application and Webex Go, respectively). I profiled all three solutions in a recent TalkingPointz research note on UCaaS Mobility 3.0.
Ericsson’s return to enterprise communications is significant, regardless of its motivation or vision. There haven’t been any new UCaaS providers for a while, and last year we lost three UCaaS providers (Star2Star and Fuze were acquired, and Mitel exited public cloud services). While the sector is still growing, so is the disparity in provider sizes.
Last year, Ericsson reported revenues of $27.088 billion—approximately 27 times what Vonage reported. So, it was significant when Ericsson said last week that it intends to increase research and development (R&D) at Vonage.
Vonage also stated it aims to market Vonage’s services to its communication service provider customers. This implies cellular services are the newest ingredient coming to the big blender we’ve seen lately that’s blurring the boundaries between UCaaS, CCaaS, and CPaaS.
It appears to be a two-way proposition. Vonage CEO Rory Read said, “This partnership will strengthen our offerings to businesses across the globe by leveraging Ericsson’s leadership in 5G, global market presence, and strong R&D capabilities.”
Vonage brings a full enterprise communications stack to Ericsson. Vonage was among the first UCaaS providers to embrace CPaaS when it acquired Nexmo in 2018. Before then, UCaaS and CPaaS were largely viewed as separate, unrelated services. Since then, we have seen most UCaaS companies extend into CPaaS with programmable APIs.
Vonage then added CCaaS (acquired New Voice Media in 2018) to its portfolio, then a programmable video provider (acquired Tokbox in 2018), an AI toolkit (acquired Over.AI in 2019), and a conversational commerce platform (acquired Jumper in 2021). Vonage has not only integrated these acquisitions, but has maintained a strong commitment to APIs and developer resources.
Read further clarified the combined vision: “The way we work, shop, learn, see a doctor, exercise, and entertain is fundamentally changing. Together, Ericsson and Vonage will be at the heart of the next wave of the digital transformation, providing enterprises, CSPs, and end users with innovative applications and services that will change how business gets done.”
As a result of this acquisition, Ericsson gains access to more than one million registered developers, or perhaps, more importantly, one million developers will gain access to 4G and 5G network APIs.
According to Vonage, the existing market for communications APIs, such as video, voice, and SMS, is growing at 30% annually and is projected to reach $22 billion by 2025. As a large international vendor, Ericsson is well positioned to accelerate the adoption and growth and expand comms APIs globally.
These APIs bridge the gaps between enterprise, service provider, and consumer services, which Ericsson hopes will result in innovative applications that accelerate the rollout of 5G and the new network capital expenditure (CapEx).
It’s certainly an intriguing acquisition, and I look forward to seeing what comes next. Vonage has always had a unique and innovative perspective. That should strengthen with European ownership that has a pedigree in mobility.