Cisco Systems’s multibillion-dollar purchases of videoconferencing leader, Tandberg, and agreement to buy Starent Networks, extends the networking giant’s reach into distribution and even content.
With its purchase of Starent, announced last week, Cisco will enable the sending of IP content wirelessly via carrier networks, while, its recent $US3 billion purchase of Tandberg will allow consumers and professionals to share IP videoconferences.
But what about the content? Cisco partly has that covered, too. Based on its acquisition of Pure Digital Technologies, maker of the Flip handheld video camera, it wants to provide consumers and workers with the equipment needed to generate content ranging from birthday parties to business meetings. Cisco won’t even need to hire actors or write scripts.
What is Cisco’s grand plan? The company has been laying out a map for years to move beyond its traditional switching and routing base. Before its acquisition of Starent, Tandberg and Pure Digital, it invested heavily in WebEx for Internet collaboration and expensive telepresence systems and placed extensive wireless systems and scores of high definition displays in professional ballparks.
“The next step in the evolution of the Internet is to make it available anywhere and at any time, which requires the convergence of the mobile world and Internet,” Cisco’s senior director of service provider marketing, Simon Aspinall, said in a blog. Cisco is banking on two-thirds of the mobile Internet traffic coming from video content in 2013, he added.
Long Term Evolution (LTE), with much higher bandwidth than current networks, will be an especially good pipe for that video content.
As such, Yankee Group analyst, Zeus Kerravala, noted that while Starent makes carrier equipment for a range of wireless protocols, including highspeed WiMax technology, it also makes gear for LTE, the leading competitor to WiMax.
Kerravala said Cisco’s interest in Starent was primarily the LTE component, which gives Cisco the ability to broaden its product mix, much as competitors Nokia, Alcatel-Lucent and Huawei Technologies have done.
An analyst at Internet Research Group, Peter Christy, said Cisco’s recent multibillion-dollar purchases stem partly from the company’s having $US30bn in available cash and wanting to sell more into the service provider marketplace to compete with Juniper. Buying Starent, which has sold into service provider markets, could bring Cisco a “multiplier effect” of Starent’s sales, since Cisco has become adept at selling products it obtained from previous acquisitions to its huge customer base. Cisco needs to move beyond its traditional networking business, Christy said.
Cisco CEO, John Chambers, “believes in video, and points to how the early use of the Internet in business systems resulted in faster economic growth in regions where it was used,” Christy said. “Now that that phenomenon has slowed down, he’s interested in networking that facilitates human collaboration.”