Let there be no doubt: Cisco's coming to your living room.
Cisco announced it plans to branch out beyond enterprise networks with a proposed $6.9 billion buyout of cable TV set-top box leader Scientific-Atlanta.
The move is an indication that Cisco intends on making home entertainment and video its next $1 billion-a-year "Advanced Technology" opportunity. The company's idea being that Cisco is IP, IP is the foundation for next generation TV, so Cisco is TV.
If you look on your cable set-top box, you're likely to see Scientific-Atlanta's logo or that of Motorola - the two companies that dominate the cable TV set-top box market. SA also makes headends, hubs, advanced encoding devices, digital content managers and satellite receivers for service providers.
SA has installed about 56 million cable devices in the U.S., representing about 40% of the market.
The acquisition helps Cisco build an end-to-end portfolio of IP TV and "triple play" - bundled voice, video and data services - infrastructure for service providers. Cisco already had the routers, switches and cable modem termination systems for cable companies; it also recently acquired DVD home entertainment technology with its purchase of KiSS Technology of Denmark this summer.
Cisco now has a set-top box to provide interactive, on-demand digital TV from consumers and, when combined with Cisco's Linksys consumer networking portfolio, a broadband router/gateway for other residential entertainment applications.
"A combined Cisco/SA is a full-frontal assault to create telco products that integrate multiple services - phone, broadband and television -from routers through set-tops inside the phone infrastructure," states market research firm Forrester Research.