Private networks designed for enterprise customers are seen by some analysts as the biggest opportunity created by 5G. Approaching this opportunity is a delicate dance for Ericsson, a company clearly determined not to compete with its service provider customers.
Ericsson offers an integrated private network solution, but enterprise customers typically purchase it through carriers. Even though CBRS spectrum now gives companies a way to own and operate cellular networks, Ericsson is partnering with carriers to deliver private network services instead of targeting enterprise customers directly.
Ericsson’s $1.1 billion acquisition of cellular router maker Cradlepoint is another part of this strategy. Like Ericsson, Cradlepoint is partnering with AT&T, which now sells Cradlepoint routers bundled with LTE service for enterprise customers. Cradlepoint is also a longtime Ericsson partner; the two companies started working together more than a decade ago when LTE was in its infancy. Both companies sell through service providers, but Cradlepoint also sells to enterprise customers through value-added resellers.
Ericsson’s Asa Tamsons, SVP and head of business area technologies and new business, said Cradlepoint's routers and software are a good fit for enterprise customers and can aggregate and integrate non-cellular devices. She estimates that roughly 85% of enterprise IoT traffic moves over non-cellular connections. In addition to cellular routers, Cradlepoint sells software for managing networks that include cellular, Wi-Fi and wired connections.
"Most of these environments will be hybrid; they'll be wired and wireless together," explained James Weaver, senior product marketing manager at Cradlepoint, in a recent company webinar. "Your solution needs to be able to incorporate those in a pretty sophisticated way." He said enterprises need platforms that can "predict linkages from an application perspective."
Another key capability is Cradlepoint’s ability to package solutions for the enterprise arm of a CSP to sell to the enterprise at scale, Tamsons said. “This will make us a better business partner to the CSPs,” she said. She already spends up to half her business development time with enterprise customers, often in tandem with a CSP, and the final sale goes through the service provider. The Cradlepoint acquisition gives Ericsson new paths to market.
"We have technology alliances with companies such as Palo Alto Networks, Zscaler, Microsoft, NetMotion, Rigado, and many others," said Cradlepoint CEO George Mulhern.
The CBRS opportunity
Tamsons sees a lot of potential for CBRS, especially in North America. In the near term, she expects the biggest demand to come from the manufacturing, public safety and transportation sectors. She said that while some companies will deploy their own networks using CBRS, the new spectrum is also a way for CSPs to grow their managed services business. 5G will enable CSPs to sell companies a “network slice,” or infrastructure running cloud-based software that can enable the carrier’s 5G network to deliver bespoke services for the enterprise. The carrier could use CBRS to supplement bandwidth, but the enterprise wouldn’t need to own spectrum or core network assets.
Enterprises are going to learn about these opportunities from carriers, as well as from integrators and from the vendors like Cradlepoint that sell on-premise wireless equipment. No matter how enterprises come to the private network discussion, Ericsson wants to be involved. Tamsons said her company is partnering with systems integrators, hyperscalers, application developers and of course device makers like Cradlepoint. She said Ericsson might consider more acquisitions of channel partners like Cradlepoint.
“M&A activity is an important part of our strategy,” she said. “I think this is one example of that. … We will continue to go after those types of opportunities where we can complement their offerings to make us and the service providers stronger in targeting the enterprise space."
"Cradlepoint is in several critical segments that I think will be important in the 5G era,” Tamsons continued. She highlighted public safety, retail point of sale, and industrial IoT as three key verticals in which Cradlepoint already has significant traction.