January 30, 2006 4:00 AM PST
Is TiVo next on Cisco's push into homes?
Already Cisco has announced plans to spend $6.9 billion on cable set-top maker Scientific-Atlanta. When the deal closes in the next couple of months, it will be the third significant acquisition Silicon Valley-based Cisco has made in the consumer realm.
The question now is, who's next? Will Cisco take a hard look at troubled but well-known TiVo, the maker of digital video recorders? What about Nintendo, maker of video game consoles? Or what about Sling Media, a start-up with technology that lets people watch cable television on their laptops or mobile devices with a broadband connection?
Though Cisco executives certainly won't say who they're looking to buy, there are some hints as to which consumer electronics companies they're considering for partnerships.
According to a source familiar with Cisco and TiVo, there's a "potential for an interesting partnership" to emerge between the two companies. TiVo, the source said, has held discussions with many potential partners.
There's no indication that Cisco is looking to buy TiVo, and details regarding a potential partnership are scant. But Cisco's recent acquisitions do suggest how serious the company is about becoming a major presence in the living room, and TiVo carries weight as a well-known consumer DVR brand. At the same time, Cisco could help TiVo regain the distribution clout it lost when satellite TV provider DirecTV said it was walking away from a longtime partnership with TiVo.
Representatives from both Cisco and TiVo said they would not comment on rumors.
Cisco, best-known for making switches and routers that shuttle IP traffic around corporate networks and throughout the Internet, has for years used acquisitions as a way to enter new markets quickly and to round out its technology and product portfolios. In the past two decades, it's acquired more than 100 companies.
The 2003 acquisition of Linksys, a maker of wireless home-networking equipment, was the company's first foray into the consumer market. Two years later, the first hint of a Cisco home entertainment strategy emerged with the company's acquisition of a small European business called Kiss Technology, a maker of DVD and DVR players.
In November 2005, Cisco took its biggest step into the living room. It agreed to buy Scientific-Atlanta, the No. 2 supplier of set-top boxes to cable operators. The deal, once completed, will instantly put Cisco in millions of homes.
If Cisco builds its consumer business the same way it built its enterprise business, it will likely make several more acquisitions, both large and small, to fill in product gaps and improve on its existing technology.
The company's consumer strategy has two main components, Chris Stevens, a vice president and general manager for Cisco's Linksys home networking division, said in a recent interview with CNET News.com.
First, Cisco plans to enhance the Linksys home-networking portfolio with products that increase the speed and ease-of-use of home networks based on IP technology. Second, it wants to sell consumer electronics products, which it hopes will help drive traffic demand for the network.
Cisco has already begun fulfilling this strategy with both the Kiss and Scientific-Atlanta acquisitions.
"If you want to figure out where we are going, just look at the building blocks we are already assembling," Stevens said. "The elements we already have in the portfolio provide us key capabilities that fit into an end-to-end solution."
First on the list of companies that would fit neatly into Cisco's plans is a start-up called Ruckus Wireless, which has developed a small Wi-Fi adapter tailored for video.
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