Swedish telecom gear maker Ericsson, on September 18, announced that it had acquired US-based vendor Cradlepoint for $1.1 billion. After the acquisition is completed, Cradlepoint will become a fully owned subsidiary of Ericsson and a part of its Business Area Technologies & New Businesses division. However, it will continue to operate under its existing brand.

Founded in 2006, Cradlepoint provides wireless WAN connectivity solutions. The company had revenues of approximately $135 million in 2019. Its business is divided into three broad markets:

Branch (i.e. fixed WAN market) — using LTE-TD, this was initially used as a back-up for fixed connections. However, now enterprises are relying on a primary connection.

Mobile — includes public safety network operators, temporary mobile networks, etc.

IoT — includes managing secure payments for large retail customers, connecting ATMs, secure ID verification and connecting surveillance cameras, including those equipped with edge compute.

In terms of business activities, there is very little overlap between the two companies. Cradlepoint essentially sells gateway routers located at the edge of the network, which connects a wireless (or fixed) local network to a wireless WAN, typically a cellular network. In contrast, Ericsson’s main business involves selling cellular equipment to mobile network operators (MNOs), rather than enterprises.

Cradlepoint is one of the leading players in the wireless WAN edge market in the US with around 23,000 customers, 1,500 channel partners and more than 1 million live SaaS subscriptions. Therefore, this acquisition will help advance Ericsson’s strategy of targeting the enterprise sector.

Although Cradlepoint's revenues will not add much to Ericsson’s bottom line today, the wireless WAN edge market is a fast-growing market and, with investment from Ericsson, the acquisition could become very profitable.

As more and more spectrum becomes available, both in the US, Western Europe and elsewhere Ericsson will face a lot of competition from rivals such as Nokia which is also investing heavily in the sector. It recently announced that it had more than 180 private network customers.

On September 28, open RAN vendor Mavenir Networks announced that it had acquired UK-based ip.access, a small cells vendor, strengthening its position in the private networks market particularly the CBRS market in the US. Counterpoint believes that the private networks market is one of the best opportunities for open RAN in the short term.

However, all these vendors risk incurring the wrath of their MNOs customer base if they are deemed to be competing directly with them. Quite how they plan to avoid this remains to be seen.

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