Cisco goes for video
Networking company giant Cisco Systems may soon have in its clutches something we use in our home for our viewing pleasure: Cable TV. Cisco has bought Scientific-Atlantic, a maker of cable TV equipment, in a shift from business technologies in the networking field to technology used in our homes. This is a good shift in my opinion, because those who haven’t had a chance to see Cisco’s high-quality wares from the networking field soon will see it in the cable equipment they use.
Cisco is paying cash for the deal, and because it’s assuming $1.6 billion of Scientific-Atlanta’s cash, the deal is worth about $5.3 billion. This acquisition marks a major strategy shift for Cisco, which has increasingly expanded its business into the home. Cisco already has a strong position with cable operators, to whom it sells routing and switching equipment. Now the company will own a critical piece of equipment that goes directly into people’s homes. The Scientific-Atlanta acquisition also firmly plants Cisco in the video market. With this gear, it will provide cable operators and the phone companies that also are entering the paid TV market an end-to-end solution for delivering video service. This solution will include everything from the infrastructure equipment that carries the video traffic within the cable or phone companies’ own networks to the set-top boxes that are connected directly to TV sets. Scientific-Atlanta is one of the largest makers of set-top boxes. Along with competitor Motorola, it dominates the market for these devices, which are increasingly becoming more sophisticated. Cable operators and phone companies see these devices as the cornerstone of their strategies to deliver new services, such as digital high-definition television, movies and TV shows on demand, and digital video recording.
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