What's going on?

Do you know how your internet actually works? How you managed to download this email? It was largely thanks to companies like Ericsson and Cisco � and they agreed to a �strategic partnership� over the weekend so that they can keep up with your (a.k.a. the consumer�s) future demands.

What does this mean?

Ericsson is one of the world�s biggest suppliers of wireless equipment. The 4G wireless broadband on your new iPhone? Ericsson has probably provided it to your cell phone carrier, e.g. AT&T or Vodafone. Cisco makes the actual hardware that runs the internet, like that router sitting beside your TV (except it makes routers and other things that are A LOT more complicated than the gear found in your living room � these things run international networks not just your Netflix connection). There is actually not much overlap between what the two companies do. By joining forces, they can market their combined strengths to their mutual customers (telecom companies like AT&T and Vodafone). They will also work together to develop new technologies, especially for the burgeoning Internet of Things.

Why should I care?

1. The bigger picture: This is not a merger. It�s a �strategic partnership.� Competitors Alcatel and Nokia did merge recently, creating exactly the sort of combined company that neither Ericsson nor Cisco wanted to compete against on their own. But strategic partnerships are often difficult to maintain as the two companies keep their independence and, therefore, inherently different interests.
2. For the stocks: A lot depends on the implementation of the �partnership.� Most analysts feel the deal makes strategic sense because the two companies have complementary products. But they are worried about the long-term feasibility of the partnership. Some argue that a merger (or Ericsson buying Cisco�s competitor Juniper) would have made more sense.