Network equipment giant Cisco has boosted its position in the video networking space with the acquisition of digital video equipment maker Scientific-Atlanta.
The $6.9 billion deal will set Cisco apart in the nascent IP-based, high bandwidth services market.
Scientific-Atlanta is virtually unknown in IT circles and is primarily focused on broadband networking and digital broadcasting. The deal is a clear demonstration of the rapid convergence that is sweeping through the global networking markets – whatever the application.
John Chamber, president and chief executive officer of Cisco, predicted that the digital video market could be worth as much as $10 billion market by 2009. "Video is emerging as the key strategic application in the service provider triple play bundle of consumer entertainment, communication and online services," he said in a statement.
The deal is also significant for Cisco because of its scale: in recent years it has focused on hoovering up swathes of small, innovative networking companies.
The deal for Scientific-Atlanta is comparable with its 1996 $4 billion acquisition of switch maker Stratacom – a deal that swiftly set Cisco apart from other networking vendors, helping to establish its dominant position.