For more than 20 years, it has successfully used acquisitions, both large and small, to enter new markets and round out its product portfolios. With more than 100 purchases under its belt, the company shows no signs of slowing down as it prepares to take its biggest leap yet into the consumer electronics and home entertainment markets.
Dan Scheinman, Cisco's senior vice president of Corporate Development, is responsible for 370 Cisco employees--40 of whom exclusively scope out hot acquisitions and investments. He considers one of his signature moments as Cisco's acquisition guru to be the $500 million purchase of Linksys, the cornerstone of Cisco's consumer business. He considers another to be the $6.9 billion acquisition of Scientific-Atlanta, maker of cable set-top boxes, which is expected to close later this month.
CNET News.com sat down with the man behind Cisco's aggressive acquisition strategy to talk about what's ahead for the company.
Q: There's been a lot of talk recently about Cisco's plans to enter the consumer electronics market. Can you explain the strategy?
Scheinman: We think that at a very, very high level there's a disruption occurring in the networking and film industries. First, service providers are rushing to build more bandwidth into their networks, because they need to deliver services in order to compete with each other. Cable has to compete with satellite, and the telephone companies have to compete with cable. So, globally you see a rush to extend higher bandwidth pipes into consumers' homes.
The second part of this is that you're also seeing the content companies looking for new distribution channels. There's been slowing growth in DVD and box office sales. Content providers want to be able to reach consumers directly, which is a real evolution for the content companies.
The third thing is you're also seeing the rise of the empowered consumer with new devices in the home. Consumers want the ability to get the content they want, where they want it, on any device they want it on. This is a real change.
We think these three things will lead to a lot of opportunity for new devices and big opportunities for improving the network. And we think we have strengths both in making devices and developing technology for the network.Recently, Cisco joined Disney and Intel in investing in the relaunch of video-on-demand service MovieBeam. How exactly does a service like MovieBeam fit into Cisco's consumer and entertainment strategy?
Scheinman: We're trying to make sure that consumers are able to watch TV where they want, when they want, on the device they want, and over the network they choose. That's our vision. Today, if you want to watch a movie, you physically have to go get the DVD to be able to do that. There aren't a lot of legal ways to be able to get recently released movies and watch it on the big screen you want. MovieBeam allows us to connect content to the big screen. And this is the first time that Hollywood is really opening this level of content digitally to be connected to TVs. So, it looked very exciting for us.
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