By buying Alcatel-Lucent, Nokia would become the leading provider of wireless equipment to service providers and significantly expand its wireline portfolio, making it a more formidable competitor to Ericsson. Specific wireline assets to be gained from Alcatel-Lucent would be the core and edge routers sold to service providers, of which Alcatel-Lucent is the No. 4 and No. 2 player in the industry, respectively.
It would then behoove Ericsson to respond in kind by broadening its own wireline portfolio by perhaps acquiring Juniper, the No. 2 core and No. 3 edge router vendor. Even though Ericsson bought Redback in 2006, it's SmartEdge routers have slipped from the radar.
And it may ignite a round of mergers in the industry as vendors fill in the missing pieces of a well-rounded wireless/wireline product line for service providers and large enterprises. If Ericsson and Juniper don’t hook up, they may individually look to others, as could Cisco.
Ericsson and Juniper have a long history. Ericsson was an early funder on Juniper’s when the company began operations almost 20 years ago. The companies entered into a joint development arrangement in 2000 that produced a routing node for mobile wireless operators, and have a distribution agreement around that and other complementary products.
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