Tuesday, August 22, 2006

Cisco Spending Spree

Networking giant Cisco have been steadily building a considerable capability in the TV on IP sector and yesterday announced another acquisition following on from Scientific Atlanta, Akimbo, KISS, Moviebeam and others.

Arroyo Video Solutions provides video on demand services and was acquired for almost $100m. It's a high price to pay for some very basic technology, but I guess Cisco can afford it..

I remember visiting the high tech studios they had built in the West London HQ at some phenomenal cost and thinking - I could do this at home for a couple of thousand pounds.

Cisco built the company on taking very cheap hardware components from the Far East, adding an almost incomprehensible operating system (CIOS) and then charging the earth for their products. Anyone coming close to competing was bought out - until Juniper was created by a breakaway team as John Chambers' company lost momentum.

Can we expect the same in the TV on IP industry ? Possibly. In my experience, using more lower end equipment works better than less higher end equipment when delivering video. Dedicated servers such as those by Seachange provide little advantage over a basic Dell box at a phenomenal premium.

The real opportunities for Cisco lie in IPv6 and multicasting, but with many of these investments focused on video on demand you have to question if there's a real strategy behind this shopping spree.

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