Cisco Systems Ltd. announced what could be a critical new partnership with Ericsson AB to work together on building the “networks of the future”.

The two firms said the partnership, which encompasses a global service partner agreement and a broad reseller agreement, would “offer leadership across network network architectures for fifth-generation (5G) wireless systems, cloud and IP and the Internet of Things”. Additionally, the two companies have also entered into a licensing agreement for their respective patent portfolios, and agreed to discuss FRAND policies relating to this.

Cisco’s current executive chairman and former CEO John Chambers courted a bit of controversy in the wake of the announcement, saying in a presentation alongside Ericsson CEO Hans Vestberg that the companies entered into a partnership because acquisitions are no longer effective in today’s fast-moving industry.

Chambers explained that partnerships are much faster to execute and therefore the correct strategy in an industry where speed is critical to future success. He explained his belief that companies have a relatively short window in which to establish themselves as a leading technology and support provider.

“This industry is about growth, innovation and speed,” Chambers said, adding that acquisitions simply take too long to complete nowadays.

“If it takes six months to get through a regulatory board and then another year to combine… this industry will be won and lost in the next three years, so it is all about speed about how you go about it,” the former CEO added.

According to Ericsson, the partnership will allow the company to extend its addressable market by an additional $1 billion in sales by 2018.

“This is an exciting partnership that will drive growth, accelerate innovation, and ensure rapid deployment of the digital transformation demanded – and needed – by customers across industries. With the future networks we develop with Cisco, Ericsson will continue to shape the Networked Society,” wrote Ericsson CEO Hans Vestberg in a blog post.

As for Cisco, the partnership should help the company to boost its revenues and extend its global reach even further. The companies boast a combined 56,000-odd patents, $11 billion in research and development investments, and have over 76,000 services professionals available to support customers worldwide.

Ericsson noted that both companies will continue to explore additional joint business opportunities as the partnership progresses.

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