RESEARCH TRIANGLE PARK — If you want to develop a better understanding as to why Cisco paid nearly $7 billion for Scientific-Atlanta, Dan Scheinman, the networking giant’s senior vice president of corporate development, is offering some interesting insight.
In an interview published online at Cisco’s web site, Scheinman disclosed that his firm first began looking into purchasing the Atlanta-based provider of cable set-top boxes back in 2002.
A goal is to capitalize on what Cisco sees as converged networks of the future that deliver the so-called triple play video, voice and data to business users and consumers.
But Cisco has a bigger target in mind. With its acquisition of Linksys, a provider of networking gear for the home and smaller businesses, as well as Scientific-Atlanta, Cisco is positioning itself as the provider of gear and software from the head-end where content is created to the end-user device, be it a hand-held or a high-definition TV or computer.
I’d call that a grand slam product delivery.
“We think that by combining Scientific Atlanta’s industry-leading video networking expertise with Cisco’s (Internet protocol) networking expertise, we are going to be able to offer unique technologies to both consumers and communications service providers,” Scheinman said. “To service providers, we’ll be able to build networks which will allow them to maximize their assets and allow them to deliver video, Internet, and voice services to customers efficiently and effectively by using a single, IP-based network infrastructure, rather than having to run multiple separate networks for each type of communications service. For consumers, we hope to create home networking technology that makes it possible for people to get the content they want-voice, data, or video- where they want, on the device they want.”
Also in the interview, Scheinman made clear Cisco did not rush into any deal. When it became clear that Scientific-Atlanta was going to continue to hold market share with cable TV firms even as they embraced IP and also was chosen by Southwestern Bell (Now the new AT&T) to help build its IP-based TV network, he said Cisco decided to buy.
For the complete interview, see: newsroom.cisco.com/dlls/2006/hd_022706.html
So what is the analysts’ take on the deal?
It’s going to take time to map it all out in a solid way. If they had a solid map right now, I’d wonder. Scientific Atlanta is a big company with a lot of products,” Deb Mielke, principal at Treillage Network Strategies Inc. in Dallas, told eWeek.com.
“Cisco people are still learning what Scientific Atlanta has. But at least Cisco knows where they’re going. At least everybody says the same thing.”
For details, see: www.eweek.com/article2/0,1895,1932439,00.asp
Cisco also realizes that it still faces tough competition in the content delivery marketplace. At a conference in Phoenix this week, Cisco Chief Executive Officer John Chambers stressed his firm will have to execute to win.
“There is not a natural winner,” Chambers said, according to Marketwatch. “Cable companies are off to a faster start” in delivering video, telephone and Internet. However, he said telecom companies are making their move with IPTV.
Who will prevail?
“It’s about [providing] services on top of the network,” Chambers said, and “from a service provider perspective, it’s who executes the best.”
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