CISCO has become a major player in the home entertainment market by acquiring Scientific-Atlanta — a global provider of set top boxes and video transmission technology — in a US$5.3billion deal.
One of Cisco’s biggest-ever buys, the deal will enable it to provide triple-play services — high-speed internet access, telephony and video — over an internet protocol (IP) network into users’ homes.
Cisco will now be able to provide much of the equipment needed by cable operators and phone companies to provide video services to consumers as well as deploying its existing IP network technology.
Most significantly it will provide the set top box — the device that connects the television set to the carrier network.
Scientific-Atlanta has platforms and technologies that allow scaling to millions of subscribers at once while Cisco’s IP next-generation network architecture (NGNA) gives users an open platform for service differentiation, allowing them to access integrated media services in the home.
“Video is emerging as the key strategic application in the service provider triple play bundle of consumer entertainment, communication and online services,” said John Chambers, president and chief executive officer of Cisco Systems.
“The combination of Cisco and Scientific-Atlanta brings unmatched experience and innovation in delivering large scale video systems and networks, and the addition of Scientific-Atlanta further extends Cisco’s commitment to and leadership in the service provider market,” he went to claim.
“Moreover Cisco’s international presence and IP leadership will also create strategic synergies that accelerate the combined growth opportunity,” Chambers added.
IP is being billed as creating a new TV watching experience, allowing people to perform interactive functions, such as cho- osing the camera angle they want while watching a sports game.
In 2003 Cisco made early inroads into the next-generation home entertainment market by acquiring Linksys — a manufacturer of home wireless routers that are used to connect multiple PCs and laptops together.
It is hoped that this technology, alongside that provided by Scientific-Atlanta, will further strengthen Cisco’s position.“As consumers demand more sophisticated information and entertainment services in their home, tightly-coupled applications, devices and networks will be essential,” said Chambers.
“The collective strength of Linksys and Scientific-Atlanta will extend Cisco’s leadership position across the entire netw- orked digital home,” he added.
“We believe that this combination of Cisco and Scientific-Atlanta will benefit our shareholders, our customers and our employees,” explained Jim McDonald, chairman, CEO and president of Scientific-Atlanta.
“The combined strengths and resources of our combined companies will position us to address more quickly the growing number of opportunities in the markets we serve and enable us to create new products and services that might not have existed otherwise,” he claimed.
Following the closure of the deal, which will be completed in the third quarter of Cisco’s financial year 2006, Scientific-Atlanta will become a division of the Routing and Service Pro-vider Technology Group under the leadership of Cisco’s senior vice president Mike Volpi.
Cisco and Scientific-Atlanta will operate as separate busine- ses and will continue to work with their existing partners.
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