What did Cisco buy? A look at its '06 acquisitions

Cisco's moves in 2006 showed the vendor's urgency to find new markets for expansion

Cisco made no blockbuster buyouts in 2006. The US$256 million in announced cash and stocks it shelled out for acquisitions this year is chump change compared with 2005, when it began the year buying Airespace for US$450 million, and ended it with the US$6.7 billion Scientific-Atlanta merger.

But Cisco's moves in 2006 showed the vendor's urgency to find new markets for expansion. Video technology was a major draw for Cisco M&A money this year, with purchases of three companies in the video surveillance, video-on-demand and streaming content markets, respectively.

And there's a method to these mergers: "[Video] is the killer application for network load," Cisco CEO John Chambers said earlier this year. Bigger network loads beget bigger routers and switches, which beget more sales and market share for these products -- which still brings in two-thirds of Cisco's product revenue.

Three other acquisitions in 2006 expanded Cisco's VoIP and collaboration technologies, while it also shored up a few of its core technology areas, such as security and Ethernet switching, with another two buyouts.

Here's a rundown:

SyPixx Networks

Acquisition announced:March 7
Headquarters:Waterbury, Connecticut, U.S.
Acquisition cost:US$51 million in cash
Market:Physical security

Cisco's first acquisition this year was SyPixx Networks, which makes IP video surveillance hardware and software. The deal gave Cisco another new toy for its Emerging Technology Group, a trend that would continue throughout the year.

SyPixx's technology allows analog video surveillance gear, as well as IP-based cameras, to be converged on an IP network, as well as managed and recorded from a central data centre. The acquisition put Cisco in the physical security market, one of the vendors emerging-technology areas, according to Chief Development Officer Charlie Giancarlo.

Over the last few years, video surveillance was among "the most boring industries any one could imagine," Giancarlo said at a conference recently. "It's highly vertical. Security cameras go to a security monitor, and 95% of it today is analog, not even digitized."

He outlined a scenario where IP-enabling video surveillance could be a benefit. "If an enterprise experiences a theft," he said. "instead of going through eight hours of tape from the night before, [you could] trigger a video from a few minutes before, to a few minutes after" an event, such as a security alarm, occurs. IP-based video would also allow security personnel to view video from Wi-Fi-enabled video devices, he added.

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