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Cisco and Ericsson sign enterprise to IoT deal as network convergence continues

The two networking giants will work together on sales and development as part of deal expected to drum up an extra $1bn a year for each company.

Networking companies Ericsson and Cisco have signed a wide-ranging business and technology deal which they said could soon be generating an extra $1bn a year in sales for each company.

Ericsson's strength is in mobile and wireless -- 40 percent of the world's mobile traffic is carried over Ericsson networks -- while Cisco is a big enterprise and datacenter networking player. Increasingly these markets are merging and consolidating - for example the merger of Nokia and Alcatel-Lucent announced earlier this year.

Ericsson and Cisco will sign a series of agreements covering areas including joint development, a broad reseller agreement, and collaboration in key emerging areas. The two say their expertise will stretch from Internet of Things (IoT) devices and sensors to access and core networks to the enterprise IT cloud.

The companies are also working on a licensing agreement for their respective patent portfolios: as part of this agreement, Ericsson will receive license fees from Cisco. The companies said both would be making additional sales of $1bn a year by 2018 as a result of the tie up.

Teams from both organizations will also begin working on a joint initiative focused on software-defined networking and network function vitualisation and network management and control.

Ericsson CEO Hans Vestberg said the deal will start by focusing on the big telecoms companies, then move onto enterprise customers and IoT.

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