Vast Developer Network, API Expertise Makes Holmdel-Based Vonage Attractive Target in Ericsson $6.2 Billion Acquisition

Word came November 22 that Ericsson (Stockholm) will be acquiring Holmdel-based Vonage for $6.2 billion. Pending regulatory and shareholder approvals, the deal should be completed in the first quarter of 2022.  [See the press release here.]

The acquisition took place under the leadership of Rory Read, CEO of Vonage, who took over that post in 2020 from company turnaround expert and former CEO Alan Masarek. [To read an insightful article about how Maserek turned around the company, see this analysis on No Jitter by Zeus Kerravala.]

As of now, it looks as if Vonage will be staying put in New Jersey, and Ericsson said that it’s committed to “accelerating Vonage’s strategy execution.” In 2015, when interviewed then CEO Masarek, he said that Holmdel was Vonage’s technology hub. The company will operate as a separate subsidiary of Ericsson and will keep the Vonage name.

During a conference call, Börje Ekholm, president and CEO of Ericsson, said that Vonage will elevate the 5G ecosystem by establishing a global network platform for 5G innovation. Ericsson stated that it would invest in R&D to further extend Vonage’s growth prospects.

It’s Vonage’s technical prowess (including its million-plus network of developers) and expertise with APIs that drew Ericsson to the company, Ekholm stated during an investor call describing the acquisition.

Vonage started out as a pioneer in voice-over internet-protocol technology, selling to consumers; as that technology became a commodity, the company reinvented itself. Starting in 2013, Vonage began acquiring a number of tech companies, thereby setting itself up as a powerhouse in unified communications in the cloud.  Today, the company is a leader in the communications platform industry, providing enterprise services across a communications-as-a-service offering.

Ericsson described Vonage as a strong stand-alone business, and said that Vonage will continue to invest in sales and marketing, as well as in R&D, to accelerate its business.  However, Ekholm noted that, “over time, we are excited about building the next-generation revenue opportunity by monetizing” capabilities in the 4G and 5G networks.

Ericsson intends to do this by building an open global platform for innovation, he stated. “It’s all about supporting the developers in creating new and premium user experiences, using advanced 5G API’s.” Ericsson will be addressing the use cases for 5G in businesses through the Vonage network. “We expect an attractive market share based on our leadership position in 5G and a significant API market share. With that, you put the power of the network at the fingertips of developers and allow for the development of the next wave of premium for communication experiences that ultimately will drive more traffic onto the network, as well as creating new, exciting experiences,” Ekholm added.

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