LG-Ericsson USA Debuts

LG-Ericsson USA made its official debut Monday, marking not only the entry of a new voice and data player in the North American networking channel, but also the end of a long and winding road for the channel-centric piece of SMC Networks.

A long-established networking player, SMC in recent years ran into branding problems between its various indirect and direct sales channels, leading many solution providers to wonder if SMC had permanently de-emphasized channel sales in favor of retail and direct service provider sales.

To relieve the conflicts, SMC spun off its Business Solution Group to become Edgecore Networks in November 2009 -- a separate company doing more than 90 percent of its business through the channel but still a subsidiary of SMC parent Accton Technology.

From there, however, things got dicier. In January 2010, Korea-based LG-Nortel, itself a joint venture of LG and Nortel Networks, entered into a joint venture with Accton that gave LG-Nortel a 60 percent stake in Edgecore and Accton a 40 percent stake. The aim was to make Edgecore, headquartered in Irvine, Calif., the North America sales arm for LG-Nortel SMB voice and data products.

Nortel, however, was in the process of being sold off following its 2009 bankruptcy, which put the overall business in further limbo. Finally, Ericsson stepped in and bought Nortel's stake in the venture in April, for $242 million.

"That's why you haven't heard from us much in the past few months," said Tony Stramandinoli, vice president of marketing for the newly established LG-Ericsson USA.

Officially debuting Monday, LG-Ericsson USA is a joint venture of LG-Ericsson (which owns a 60 percent stake) and Accton (40 percent). SMC Networks also still exists, and is also a subsidiary of Accton, but sells to multi-service operators (MSOs) and is now direct-only model.

"We maintain all of the channel business we had in the past," Stramandinoli said in a recent CRN interview, describing a legacy North America channel that comprises between 3,000 and 3,500 North American data networking VARs.

The plan for LG-Ericsson USA is to offer the channel the data networking portfolio that they know from the SMC heritage, and also to introduce new voice, data and other IP networking products -- including the venture's first-ever hybrid TDM (time division multiplexing), and IP-capable PBX products -- all of which will be branded under LG-Ericsson USA.

In addition, the company maintains what were SMC's, then Edgecore's, distribution relationships with Ingram Micro, Tech Data and other distributors. It will seek to recruit voice-savvy VARs and other net new channel partners as well, Stramandinoli explained.

Next: New Products, Channel Program On The Way

LG-Ericsson USA will have products and call center applications that can support up to 30,000 seats, but the company's principal focus will be in SMB, specifically the market segments spanning 10 users up to 1,200 users. It isn't LG-Ericsson USA's intention to challenge Cisco, Avaya and others at the high end of the IP networking enterprise, Stramandinoli said. He explained that he sees the company as a more direct competitor to ShoreTel and Mitel, and also vendors such as Panasonic, NEC and Samsung that have hybrid TDM offerings.

"There are a lot of vendors in the voice market in North America, but if you look at the SMB piece of the market, most of them just provide telephony products and don't provide full data and telephony products, both," he said.

Much of the former SMC and Edgecore executive team also remains intact. Along with Stramandinoli, whose tenure with the company goes back to 1990, are Vice President of Sales Mike Boissiere and Senior Vice President Keith Alexis, all now part of a new executive team under LG-Ericsson USA CEO S.B. Mun.

"It's a lot of the same faces," said Stramandinoli, who said LG-Ericsson USA will also be looking to hire for its internal and external sales teams as it expands.

A channel program revamp is on the way, Stramandinoli said, set for rollout in mid-September.

"In the past, we had a multi-tiered channel program that targeted features and more benefits for people in higher levels," he said. "We've stripped all of that out. It's going to be set up to enable partners, whether they're small or large, to receive similar benefits, and we're also adding additional training elements. We're looking forward to it."