Swedish telecommunications giant Ericsson intends to acquire a majority stake in San Francisco-based enterprise cloud provider Apcera.

Under the terms of the deal, Apcera will continue operating as a standalone company, but its products will benefit from integration into the Ericsson Cloud System. The financial terms were not disclosed.

“To realize the full potential, cloud environments need security and governance, which our partnership with Guardtime and our acquisition of a majority stake in Apcera provides,” Jason Hoffman, head of cloud software at Ericsson said.

“With these technologies in place, enterprises and individuals can trust the integrity and the confidentiality of their infrastructure." 

The announcement comes several days after the company said it would shut down its loss-making modem business.

The Ericsson cloud
Apcera was founded in 2012 by Derek Collison, a former VMware engineer who helped architect the Cloud Foundry platform. Over two years, the start-up managed to attract US$ 7.2 million in funding from investors including Anderseen Horowitz and Kleiner Perkins Caufield & Byers.

Apcera’s flagship product is Platform-as-a-Service (PaaS) called Continuum, which enables full control of IT resources on-premise, in the cloud or in hybrid environments.

Ericsson will provide the start-up with a “significant” funding package and help expand its worldwide enterprise sales channel.

“With a history of transforming the world's most demanding businesses and the global ability to deploy and scale critical infrastructure, Ericsson will enable us to accelerate our innovation of Continuum and provide enterprises the next-generation platform that enables them to achieve a significantly faster time-to-market as they deploy, orchestrate and govern a diverse set of workloads, both on premise and in the cloud,” commented Collison, CEO of Apcera.

Ericsson is the world’s largest telecommunications equipment provider, with 40% of the world's mobile traffic carried over its networks. But this market is transforming thanks to Network Functions Virtualization (NFV), and an increasing number of telecoms customers are relying on non-specialized servers for day-to-day operations.

The acquisition should strengthen the company’s position as the provider of enterprise and operator cloud services, helping diversify its offering as Ericsson abandons the modem business.

Last week, CEO Hans Vestberg announced that the company would stop working on new modems, eliminate around 1,000 jobs and switch the R&D focus to radios and antennas.

The Apcera deal is likely to close during Q4 2014.