Cisco, Ericsson, and Intel to Build Next-Generation Wireless Gear

February 22, 2016, 8:09 PM UTC
Cisco CEO Chuck Robbins screenshot
Cisco CEO Chuck Robbins screenshot
Courtesy of Cisco

Cisco and Ericsson showed some progress on what the two companies have been working on since the two signed a blockbuster partnership in November.

The two corporations said on Monday during the Mobile World Congress event in Barcelona that they are teaming up with chip giant Intel (INTC) and wireless service provider Verizon (VZ) to build and demo a 5G router.

Details about the new router were scant as neither company said when the next-generation device would be available to the public.

Cisco (CSCO) will contribute its networking hardware expertise, Ericsson is offering wireless networking technology, and Intel is providing the silicon chips used to power the device, according to an announcement.

The three companies are members of a Verizon-led initiative to develop and test 5G wireless technologies. Apple (AAPL), Nokia, and Qualcomm (QCOM) are also members of the group.

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Mobile hardware makers and wireless carriers have been busy investing in 5G technology as they anticipate of a wave of hardware upgrades to faster and more efficient gear by 2020.

Although many wireless companies have differing definitions of what constitutes 5G wireless technology, the general consensus is that 5G tech should be more suitable for the rise of Internet-connected devices like automobiles and factory equipment than what’s currently available on the market.

Last June, Fortune reported that Ericsson developed and tested a 5G prototype device in Stockholm, Sweden and Plano, Texas.

Both recent earnings reports from Cisco and Ericsson show that sales in both companies’ core hardware products continue to decline, indicating the two need a hot new product that resonates with networking gear buyers. New networking gear tailored for wireless service providers could be one way to spur growth for the two partners.

However, the companies face some challenges.

Facebook also announced during Mobile World Congress a new open source hardware and software initiative specifically for the telecommunications industry. The group consists of technology giants such as Nokia, Deutsche Telekom, and SK Telecom. The members will share and swap blueprints for designing and building technology meant to improve wireless networks in the hope that doing so will lower the price of conventional gear.

In January, a handful of wireless service providers like AT&T (T) Verizon joined a similar Facebook-led group tailored for custom designed data center gear. In contrast, the new Facebook-led telecom group would concentrate on developing the type of wireless technology used outside the data center.

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If more telcos decide to build their hardware in a similar manner as Facebook, in which they use open-source designs and contract with generic manufacturers to build the gear, hardware makers like Cisco and Ericsson could see sales fall.

Additionally, the telecommunications companies that are members of these open source groups could put pressure on hardware manufacturers to sell their gear for cheaper.

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