Ericsson closes $1B Cradlepoint purchase with eye on enterprise

Ericsson on Monday completed its purchase of Idaho-based Cradlepoint, as the vendor looks to increase its share of the 5G enterprise market.

Ericsson paid about $1 billion cash-in-hand for Cradlepoint, which provides wireless wide area network (WAN) and edge gear for enterprises, primarily in the U.S.

Announced in September, Ericsson has said Cradlepoint’s 4G and 5G solutions complement the Swedish vendor’s and would help to both build a strong enterprise offering and increase service provider customers’ returns on their 5G network investments.

Cradlepoint sells cellular routers, but also offers network management software for Wi-Fi and wired networks.

As of September, the company had more than 1 million active subscriptions for its network cloud software as a service (SaaS) platform, which offers zero-touch onboarding.

RELATED: Ericsson marries private network expertise with channel partner access through Cradlepoint purchase

More than 700 employees are joining Ericsson from Cradlepoint, which will continue to operate under the same brand as a standalone subsidiary within Ericsson’s Business Area Technologies & New Businesses segment.

Ericsson expects a 1% negative impact to operating margins in 2021 and 2022, with Cradlepiont to contribute to operating cash-flow beginning in 2022.

Private networks, CBRS

As private networks gain interest for enterprise, Cradlepoint has relationships across numerous channel partners and experience in providing networking gear for private LTE deployments, as well as a full portfolio of 5G-ready products.

Cradlepoint provides connectivity products, including wireless routers to large enterprises, as well as small and medium businesses and public safety agencies. It has more than 1,500 channel partners and helps connect things like branch offices, mobile workforces, ambulances, and IoT devices.

RELATED: Exploring CBRS for industrials with Anterix, Cradlepoint, Nokia — Special Report

Headquartered in Boise, Idaho, the company has relationships with both service providers and integrators. In September, Ericsson said the majority of Cradlepoint’s revenue comes from 10 service provider customers.  

In May, AT&T expanded its relationship to allow public safety agencies to buy Cradlepoint wireless edge solutions directly from the carrier. Last montn, AT&T said it would offer a private network solution over CBRS with Ericsson.

Cradlepoint also has been involved in CBRS, including industrial verticals. For example, its gateway and other solutions were used for an oil and gas use-case with PK Solutions at an oil refinery involving IoT sensors, providing both Wi-Fi and cellular connections where needed.

RELATED: CBRS private LTE networks help keep oilfield workers safe

Expanding presence, customer channels

When the deal was first announced, investment analysts at Cowen said that Cradlepoint should help Ericsson address 5G enterprise market opportunities beyond the vendor’s traditional service provider market.

Ericsson, meanwhile, has a significant opportunity to grow Cradlepoint’s footprint and revenue outside of the U.S., wrote Cowen analysts at the time.

Ericsson too pointed to the opportunity to expand Cradlepoint’s international presence via the Swedish vendor’s relationships with global operators. Back in August, Ericsson marked a 5G contract milestone, hitting 100 deals with unique service providers – as of the end of the third quarter, that increased to 112 commercial 5G agreements.

REALTED: Ericsson hits 100 mark for 5G deals

Cradlepoint already has international office in the U.K. and Australia, as well as an R&D center in Silicon Valley.

“With our early 5G customer deployments, we have seen firsthand how this revolutionary technology can transform a business. Now, as part of Ericsson, Cradlepoint is uniquely qualified to provide the Wireless WAN edge, end-to-end intelligence, and quality of experience you need to confidently put 5G at the center of your next-generation WAN,” wrote Cradlepoint CEO George Mulhern in a published letter to customers.

The networking solutions provider recently detailed work with Telstra and Taylor Construction in Australia, after it debuted 5G wireless edge products there in February. Cradlepoint plans to expand availability globally in 2021.

At a trial construction site Taylor is experimenting with 5G enterprise offerings from Telstra alongside Cradlepoint’s NetCloud Service for Branch and 5G wireless edge products like a ruggedized 5G adaptor. Applications include IoT structural sensing, wide-area safety scanning with 360-degree 8K streaming, and holographic building visualization.

“With Cradlepoint’s market leading solutions, we are strengthening our enterprise offering and taking an important step to lead the next wave of enterprise network transformation,” said Ericsson's Åsa Tamsons, senior vice president and head of Business Area Technologies & New Businesses, in a statement. “Together, we will power solutions to the customer edge that help improve productivity and deliver real-time services, enabling us to drive faster adoption of 5G in enterprise segments. This is good news for our customers as it helps them to accelerate their returns on 5G investments."