Swedish Ericsson has made a cash offer at a value of 2.1 billion USD for american IP-technology firm Redback.
Many operators today are today considering investing in all-ip networks. Especially after seeing the successes of voice over IP-telephony and the internet video sites growing in popularity.
The bid for Redback is made to strengthen growth in the IP area. To support large-scale access to telephony, internet, tv and mobility, it is important to have a router allowing for uninterrupted video and speech for many simultaneous users. To Ericsson it is naturally also an advantage if it can constitute a part of a 3G mobile phone network.
Redback is listed on Nasdaq and is well-known for its edge router technology. An edge router is closer to the user and the household or office than a core router. With this technology, Ericsson can get the attention of these IP-interested operators and service providers.
Ericsson has some catching up to do. Alcatel has been working with Microsoft and Deutsche Telekom. Siemens bought Myrio, IP-tv gurus last yaer. Since then, Alcatel has merged with Lucent, and Nokia has almost started its announced co-operation with Siemens.
This summer, Ericsson partnered with IP-tv company Kasenna. With this bid, Ericsson is now trying to acquire the strategically important IP knowledge that the traditional telecoms company has partly lacked before.
With an acquisition, Ericsson also positions itself in the competition with American rivals and router specialists Cisco, as well as Jupiter Networks. However, Ericsson is currently collaborating with both companies.
The bid also helps completing the ip-offering, started by the acquisition of Marconi last year, manufacturers of, among other things, optical network and broadband equipment.
Redback is based in Silicon Vally and will become a wholly-owned subsidiary of Ericsson, and will organizationally end up in the Network business unit. The placement in the center of the IT world might also give Ericsson another valuable channel into the business.
Redback was one of the victims in the IT crash and applied for bankruptcy protection in 2003. Since then, the company has focused on high-availability routers. Today, the company has 800 employees. The turnover the first three quarters of 2006 was 197 million USD. However, the company posted a loss of 6.6 million USD for the same period.
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