Ericsson slightly cut projected market growth for coming years at its Capital Markets Day, while trumpeting the prospects for its strategic alliance with Cisco.

The Swedish vendor expects a compound annual growth rate (CAGR) for the total telecoms market in 2014-18 of between two per cent and four per cent (although it aims to grow faster).

This figure is down from its year-ago assessment of CAGR of between three per cent and five per cent for 2013-17.

In addition, its forecast for CAGR in the network equipment market is between one per cent and three per cent in 2014-18, down from two per cent to four per cent at last year’s event.

The new projection for the telecoms services market is three per cent to five per cent (2014: four per cent to six percent), while support solutions is predicted at seven per cent to nine per cent (the same as 2014).

Cisco deal
The newly announced partnership with Cisco, unsurprisingly, featured strongly during the Capital Markets Day. John Chambers, Cisco’s executive chairman, appeared on stage alongside Hans Vestberg, Ericsson CEO.

The duo’s wide-ranging deal is expected to generate an additional revenue opportunity of $1 billion or more for each company by 2018. In addition, the Swedish vendor said it would enjoy synergies of SEK1 billion ($115 million) by 2018.

Ericsson confirmed its strategy is to lead in its central businesses of radio, core & transmission and telecoms services. Plus it is aiming for “leadership” in targeted areas: cloud, IP networks, TV/media, OSS/BSS, as well as a so-called Industry & Society segment where it hopes to address new customer segments outside telecoms operators.

For end-September 2015, the total sales in these targeted areas was SEK 45 billion, up from SEK 35 billion for the same period last year, so representing a growing proportion of Ericsson’s total sales. Estimated market growth for targeted areas is a CAGR of ten per cent.

The initial focus of the Cisco alliance will be the resale of the latter’s networking products; jointly offering systems integration and managed services to service providers; joint cloud and 5G development; and a cross patent licensing agreement.

In the future, the alliance will embrace joint backhaul solutions; seamless indoor/outdoor coverage; cloud and data centres; joint IoT platforms; and comprehensive systems integration, managed services and tech support for enterprises.