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Cisco Defies "Plumber" Image, Buys Scientific-Atlanta

Largest Deal for Major Silicon Valley Company in Years

Although hardly of major concern to the day-to-day existence of SYS-CON Media's core audience of software developers, the announcement of a major acquisition by Cisco Systems is nevertheless important for the state of the overall technology industry. Cisco, which was in serial acquisitions mode during the height of the technology boom in the late 90s, has been active again over the past year, and its announced acquisition of Scientific-Atlanta for almost $7 billion sends a sign that the company is struttng again.

By acquiring Scientific-Atlanta, Cisco "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," Cisco CEO John Chambers (pictured) said in an official statement. "Moreover, Cisco's international presence and IP leadership will also create strategic synergies that accelerate the combined growth opportunity."

Renowned commentator Tim Bajarin, principal analyst with Creative Strategies, Inc., told SYS-CON that the deal "closes the loop of a Cisco back- and front-end customer cycle. Cicso (had been) well-placed to manage the back end, but had almost no control of the actual consumer front-end experience. With this acquisition, Cisco is able to deliver a potentially powerful complete customer experience that they can influence and deliver at both ends."

Cisco CEO John Chambers may also have taken offense to a recent column that I wrote, in which I described the company as a group of "plumbers," although any influence this writer may have over Mr. Chambers is decidedly unconfirmed. The company touts itself as a global leadership company, with its spate of  "one world" ads durng the glory days never actually stating what the company did for a living. Its market cap, once among the glories of the universe, still stands at more than $100 billion. Yet the company's stock performance fell harder than the Nasdaq as a whole during the crash, and today trails the the Nasdaq's recovery by a significant margin, let alone the Dow Jones Index (see chart below).



Will the Scientific-Atlanta deal re-establish the company as a worldbeater? Is this move truly a loop-closing, synergistic strategic move? Is there a similar corprorate culture, and can Cisco management address the challenges of having a massive San Jose headquarters trying to manage thousands of Scientific-Atlanta employees on the other side of the country? If nothing else, the merger should benefit Delta airlines, assuming that most company execs will fly commercial on the San Jose/San Francisco-to-Atlanta route.

For now, chins are up and the deal shows that there is strategic thinking and continuation of the idea that traditional B2B companies such as Cisco can reach out to individuals as well as companies, driven by the inexorable digitization of content and delivery of such to a global consumer market.


More Stories By Roger Strukhoff

Roger Strukhoff (@IoT2040) is Executive Director of the Tau Institute for Global ICT Research, with offices in Illinois and Manila. He is Conference Chair of @CloudExpo & @ThingsExpo, and Editor of SYS-CON Media's CloudComputing BigData & IoT Journals. He holds a BA from Knox College & conducted MBA studies at CSU-East Bay.

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ISSJ News Desk 11/18/05 12:13:06 PM EST

One characteristic of the boom years of the late 90s was the serial acquisition of companies by Cisco. That stopped when the bubble burst, as the company lost hundreds of billions of market cap and shed thousands of employees. But Cisco has been active recently, and now has announced a megadeal to buy Scientific-Atlanta.

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