Mutual benefits of Ericsson, Telcordia

OvumTelcordia grew out of the US telecoms establishment. Following AT&T’s divestiture in 1983, the seven resulting companies (“Baby Bells”) set up Bellcore as their centralized R&D labs. Bellcore was a potential challenger to AT&T’s Bell Labs in terms of innovation and research, with objectives that were both broad and challenging.
However, Bellcore’s seven-way ownership structure made it difficult for the company, and as each Baby Bell evolved and developed its own priorities, the diversity of Bellcore’s internal client base became a formidable challenge. In fact, it was almost impossible for one company to meet the diverse R&D requirements that were asked of it.
Bellcore did make progress in some significant areas, including standardizing hardware for central office use, creating documented standards for network equipment, and managing the North American numbering plan.
Telcordia knows legacy systems
After operating for nearly 30 years, separating from the Baby Bells, and being acquired by Science Applications International Corporation (which changed the company’s name from Bellcore to Telcordia in 1997), Ericsson may find that Telcordia has “buried treasure” in its foundations. While Ericsson purchased Telcordia to add to its services portfolio, Ovum believes that the true value for Ericsson may lie in Telcordia’s client relationships rather than in any single asset or technology.
Telcordia inherited legacy OSS systems that provided the majority of the support for legacy time-division multiplexing networks. However, in the past ten years, Telcordia’s experience with new network vendors and intelligent network services has provided additional domain knowledge that is of extremely high value to a number of leading telcos. As a result, Telcordia is in a strong position to manage inherited legacy systems, migration, and new system upgrades and activation.
The buried treasure
Telcordia’s inventory of systems and infrastructure within the broad scope of mobility and IP network support will be very valuable to Ericsson’s current product portfolio and existing customers, especially as many of these service providers continue their transition to IP-based and next-generation mobile infrastructure. The current network outsourcing business of Ericsson will only be enhanced by having some of the knowledge and traffic data provided by many of these systems and by the respective networks that they are compatible with.
While Telcordia is no longer restricted to North America, its presence in the region is one of the major benefits that Ericsson will gain from the deal. The importance of relationships and business-in-hand as a basis for creating momentum for new business cannot be overlooked. By acquiring Telcordia, Ericsson will be able to avoid reverse engineering new systems and will be able to support infrastructure to layer on top of legacy systems.
It will also benefit from internal domain knowledge of working systems with live network information. Although existing relationships and expertise in legacy systems are not assets that appear on the balance sheet, they are resources that Ericsson will be able to leverage almost immediately.