5/4/2004 -- The friend of my enemy is my friend -- call it an old Pashtun saying retrofitted for the cut-throat networking sector, and one that aptly describes Cisco Systems Inc.s alliance last week with Scandinavian telecommunications giant Ericsson.

After all, Ericsson is cozy with another prominent purveyor of enterprise and service provider networking gear: Juniper Networks Inc. Ericsson has been reselling Junipers routers since 1999, for example, and the two companies also have at least one joint venture under their collective belt, an initiative launched in 2000 to develop wireless routing solutions.

Just in case you havent been paying attention, Cisco aggressively competes against Juniper in both the service provider space (from which Juniper derives the bulk of its revenues), and, increasingly, in the enterprise, as well. (See http://www.tcpmag.com/news/article.asp?EditorialsID=550)

Thats what makes the partnership Cisco notched last Wednesday with Ericsson all the more interesting, analysts say. Although the alliance isnt unprecedented -- Cisco already has a reseller agreement with Ericsson, after all -- it hints at a more substantive degree of cooperation between the two companies.

For the record, the Cisco and Ericsson unveiled a multi-year, joint-marketing effort to encourage service providers to transition to new multi-service, IP-based solutions. As a part of the agreement, officials say, the two companies will jointly define, integrate and offer multi-service network solutions.

Telecommunications providers are anxious to replace their legacy circuit-switched infrastructures with IP-based solutions that enable them to offer a range of new services, officials say. By upgrading and modernizing existing networks to multi-service networks, wireline operators can offer a wider variety of services and at the same time reduce their costs. Today's market demand for these new services makes the timing right for Ericsson and Cisco to team up, said Dan Scheinman, senior vice president of corporate development at Cisco, in an interview posted to the companys Web site.

Added Scheinman: This alliance will provide solutions to help wireline operators transition from circuit to packet-based networks by building on Ericsson's strengths in multi-service networks along with leading expertise in systems integration and Cisco Systems' leadership in IP routing and Ethernet.

Theres a services component to the alliance, as well, involving both Ericsson's global service organization (with operations in more than 140 countries) as well as Cisco's global advocacy organizations. In this regard, the two partners expect to develop joint capabilities that help customers deploy multi-service networks, as well as assist them as they upgrade to new multi-service solutions and integrate them with their existing systems.

Officials say that the alliances range of core network solutions will address both classic telephony as well as new multimedia services, and will be will be based on Ericsson's ENGINE softswitch portfolio and Cisco's core routing products. Theres also a broadband access offering based on Public Ethernet over DSL that leverages DSL multiplexing and Ethernet switching devices from Ericsson and Cisco, respectively.

Cisco and Ericsson say that at least two prominent European telecommunications providers, Telefónica and Telstra, have already expressed interest in their new alliance.

Joe McGarvey, a senior analyst in carrier infrastructure with consultancy Current Analysis Inc., says that theres more of an upside to the agreement for Ericsson than Cisco. [T]he strategic agreement provides much more weight to Ericssons PSTN to packet migration strategy. By tightly integrating its ENGINE softswitch portfolio with Ciscos IP routing equipment, Ericsson can offer carriers end-to-end solutions for modernizing their voice and data networks, he comments. The alliance is only of moderate importance to Cisco, as the worldwide leader in the IP router market will not gain significant market share through the alliance, just as it would not suffer a significant decline without it.

Nevertheless, McGarvey notes, the accord could benefit Cisco in another, less obvious way. Ciscos alliance with Ericsson is likely to have an impact on the relationship between Ericsson and Juniper, which consistently is responsible for more than 10 percent of Junipers quarterly revenue, he concludes. Players in the metro Ethernet space, such as Extreme, Foundry, and Riverstone, will find it more difficult to compete with Cisco in accounts that feature Ericssons DSL equipment. -Stephen Swoyer