I’ve heard a few people state recently that Cisco hasn’t made a large acquisition in the last couple of years. Although the Insieme/Cisco ACI spin-in was high profile, it was moderately valued about USD$800MM and it wasn’t really an acquisition. It’s the acquisition of NDS that most people are not aware of.
Cisco acquired NDS in March 2012 for USD$4billion and was 49% owned by News Corp & 51% by private equity. NDS is a software platform for cable, satellite and video carriers to deliver video over different networks including legacy cable networks.
Today, this product is known as Videoscape and is described as:
Cisco Videoscape is the industry’s first “experience platform.” It powers amazing subscriber experiences that are personalized, synchronized, and more social than ever before, delivering business results to pay TV providers and media companies.
Videoscape is a distribution platform for video that is used by service providers that combines a custom hardware platform and software platform that exposes some APIs for remote management. No doubt, there is good integration with the Scientific Atlanta boxes and Cisco perceives substantial value in that synergy since John Chambers loudly proclaims ‘We’re Not Getting Out of Set-Top Boxes’ in spite of poor performance and analyst opinions.
It’s worth noting that Netflix is also a streaming video distribution platform but works in the retail market. Similarly, Amazon Video is a streaming platform. Cisco’s Videoscape is a product for service providers like cable and satellite companies.
Although these are different markets and perhaps even significantly different, the platforms are similar in function and capability at their core,namely, to deliver media content over a network. There are two potentials here, Cisco has a major revenue flow derived from cable companies who deliver media. This is additional to the existing network products and services such as routers and switches, DSLAMs, GGSN/SGSN etc. Plus the set top boxes via the Scientific Atlanta business unit that isn’t performing well.
Compared to Netflix or Amazon, Cisco would appear to have much stronger position in this market. Equally, Cisco has not shown a capacity to handle retail/consumer and unlikely to go into the consumer market. Cisco has had a number of high profile failures in the consumer market – Pure Digital (Flip Video cameras), Linksys (home networking), Umi(home videoconferencing) and CIUS (Android tablet) are high profile examples and makes unlikely that Cisco would compete in the retail market.
But Cisco does have a Netflix-style business in it’s product portfolio and the customer who purchase it are largely in competition with Amazon Video, Netflix or other streaming video sites. And it was a USD$4B purchase. Cisco is a lot bigger than most people realise and works in a lot more markets than just Enterprise switching & routing. It’s worth keeping in mind when Cisco does things that don’t seem to make sense.