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Ericsson and VMware Team Up for This $70 Billion Opportunity

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Over 50 operators have responded to vendors’ call

Ericsson (ERIC) and VMware (VMW) have decided to team up to pursue the billions of dollars in revenue opportunity in the network virtualization market. According to estimates by Global Market Insights, the global network function virtualization market will be worth $70 billion by 2024. Network virtualization is still in the early stage of adoption, and Ericsson and VMware seem to believe that they can help them take a lead in this market.

Ericsson and VMware say that the reason they decided to team up is that they want to simplify network virtualization for communication service providers. The vendors also revealed that more than 50 providers already use their network virtualization solutions including Vodafone (VOD), one of the world’s top mobile operators by subscribers. Vodafone operates in more than 30 countries and serves hundreds of millions of mobile subscribers.

Ericsson’s revenue rose 10%

Network operators all over the world are looking to virtualize their networks in order to operate more efficiently and save on their operating costs. The need for operators to cut costs has become more important as they seek to raise funds to invest in the deployment of 5G networks, which promises to help them create new revenue streams. Nokia (NOK) is among the vendors pursuing network virtualization dollars.

Ericsson generated $6.8 billion in revenue in the fourth quarter, which ended in December, representing an increase of 10% YoY. Nokia’s revenue rose 3.2% YoY, while Samsung’s (SSNLF) revenue declined 10% YoY in the December quarter.

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