* Cisco snags start-ups assets for $89 million
As expected, Cisco announced a definitive agreement to purchase the intellectual property, a majority of the engineering team and select assets from privately-held Procket Networks, a maker of routers and routing technology, for $89 million in cash.
Procket has expertise in routing silicon and software development. Cisco says the purchase will add a “rich intellectual property portfolio” and a team of “proven” silicon and software architects to Cisco’s own routing technology and products.
Cisco inherits 120 to 130 engineers.
Procket began entertaining offers a couple of months ago after it fell $20 million short in its latest round of funding earlier this year. But the deal is a curious one. Procket was an emerging competitor to Cisco in core routing with the introduction of its PRO/8800 router last year. Procket had garnered about 2% of the 10G bit/sec routing market in the first quarter of 2004, according to Dell’Oro Group.
A Cisco spokesman says Cisco is not acquiring Procket products, customer contracts, liabilities, debts or real estate.
And Cisco just announced its own next-generation core router, the CRS-1, amidst much fanfare three weeks ago. Cisco heralded the CRS-1’s arrival as the beginning of a new era of homegrown routing innovation for the 20-year-old company. The CRS-1 took four years and $500 million for Cisco to develop, and features 40G bit/sec silicon packet processors (SPP) co-developed with IBM, as well as a modular IOS-XR operating system with a kernel acquired from QNX Software Systems of Ottawa.
Cisco and IBM claimed the SPPs are “the world’s most sophisticated 40G bit/sec application specific integrated circuits”, yet Procket’s silicon technology would now seem to cast the future of the SPP into doubt. Procket also has a modular operating system for its routers that would appear to the limit the lifespan of IOS-XR as well.
The Cisco spokesman says Procket’s expertise in customizable off-the-shelf (COTS) development and engineering will complement both Cisco’s SPP and own COTS activities. Procket’s technology is expected to refresh a huge chunk of Cisco’s routing portfolio, from the 7200 series devices used at the enterprise and service provider edge, to the 12000 series Internet edge and core routers.
Procket engineers will be working on provider edge extensions to the IOS-XR operating system and a follow-on generation to the SPP, oriented toward lower-end systems, that Cisco already has underway.
Upon closing of the deal, Cisco will own Procket’s entire intellectual property portfolio. The engineers, including Procket Founder and CTO Bill Lynch, a silicon innovator and lead architect for Sun Microsystem’s UltraSPARC-IV microprocessor, will become part of Cisco’s Routing Technology Group under Senior Vice Presidents Mike Volpi and Prem Jain.
In all, 17 former Cisco engineers that were employed by Procket will be rejoining Cisco, the spokesman said. Procket President and CEO Roland Acra, who had been a Cisco service provider CTO, will be under contact to Cisco until Procket’s assets are assimilated into the company. He will then move on to other endeavors.
This asset purchase is subject to various standard closing conditions and regulatory approvals, and is expected to close in the first quarter of Cisco’s fiscal year 2005. After that, Procket will wind down operations and dissolve.
