Is Cisco becoming the IP video giant?

Cisco has made several acquisitions which illustrate that it is targeting next-generation IP video applications for its next big move.

Several strategic acquisitions indicate that Cisco is setting itself up to become a dominant force in next-generation enterprise IP video applications like digital signage, interactive advertising and IP video surveillance.

And while it is becoming increasingly clear that Cisco is gearing up for the next wave of IP video and other next-gen apps, it'll also be Cisco's core competency as a networking vendor that helps push it to the forefront of the new wave of IP applications.

In a recent report entitled "Warning: Cisco Positioning Itself to Dominate Next Generation Enterprise IP Video Applications," MultiMedia Intelligence's chief strategy officer Rick Sizemore dissected a string of recent acquisitions by the powerhouse vendor that individually seemed innocuous, but when looked at as a whole, indicate that Cisco has bigger fish to fry.

"Cisco has the capabilities, it appears, to become a one-stop shop [for next-generation IP video]," Sizemore said. "Cisco is a mature company and is looking at new ways to go."

The first step in Cisco's plan was the November 2005 purchase of Scientific Atlanta, he said. That US$6.9 billion deal brought in new infrastructure and equipment that included components for MPEG encoding and decoding digital content.

Second, the Scientific Atlanta deal helped Cisco find an ally in TiVo, the digital video recording company. "The combination of Scientific Atlanta technology and market girth and the user-friendly TiVo graphical user interface provides software and usability expertise," Sizemore said.

From there, Cisco bought a small, 10-person company called Tivella. That December 2006 acquisition captured a firm that develops software for digital signage, giving Cisco an edge in the digital signage market.

Five months later, in May 2007, Cisco picked up Broadware, a company that enables IP video surveillance, monitoring, management and storage. Sizemore said that deal supplemented Cisco's earlier grab of Sypixx, a company that provides products that bridge and manage analogue surveillance equipment in an IP network.

Last, and most recent, is Cisco's September 2007 purchase of Cognio, a wireless spectrum management vendor.

"This acquisition provides Cisco with the ability to better manage the wireless spectrum, enhance their QoS, [and] secure application delivery," Sizemore said. "And [it] allows them to deliver a rich, dependable end-user mobility experience."

The Cognio purchase rounds out the five-step plan for Cisco, he said, proving that applications like networked digital signage, interactive advertising and IP video surveillance are now in Cisco's cross-hairs.

"Individually, the steps are notable, but not dramatic," Sizemore wrote about the string of acquisitions. "However, combined, the acquisitions provide Cisco with a launching pad to dominate a variety of next-generation IP video applications."

According to Sizemore, the Scientific Atlanta buy can vault Cisco into the interactive advertising market by enabling IP on set-top boxes. That method can give Cisco the ability to leverage its enterprise expertise to create a two-way marketing and sales engine directly into the living room, using a familiar and friendly interface from TiVo.

On the IP video surveillance side, Cisco is looking to make itself pervasive across the enterprise, the government and other entities. However, the market is in the early stage of a transition from analogue closed-circuit TV systems to networked IP-based solutions, Sizemore said, and that transition will create a bigger demand for network switching gear, storage, cameras and a variety of other software-based application packages. Moreover, it puts high-bandwidth and mission-critical digital video onto the corporate network, which Sizemore called "a wedge in the door for further enterprise-based video applications."

These moves by Cisco illustrate that the vendor is ready to dive into digital signage, an emerging technology that Sizemore said has the potential to transform the customer experience and promote richer communication.

"In January of 2007, Cisco had a group focused on networked digital signage," he wrote. "One of the results is a partnership with NEC and Cisco, announced earlier this year, to offer networked digital signage. Trials are being conducted at select Hyatt hotels for use during big events like trade shows and large gatherings."

Sizemore said a system of networked digital signage outfitted with RFID semiconductor chips can better serve and manage attendees by containing data such as attendee stats, names and companies.

"An event holder can better determine attendance at various breakout sessions, better direct people with the displays," he said. "IP video surveillance adds an enhanced level of security and additional video-content analytics possibilities. With wireless spectrum control, quality of service is improved, and accuracy to ensure [that] attendees receive critical data if and when needed."

Despite all of the steps coming together to form a cohesive plan, Cisco's strategy is not without its challenges, Sizemore said. Most notably, the company must overcome the mind-share hurdle. Currently, Cisco is not a known brand in the next-generation IP video applications space. It will need to develop and market its solutions while also educating potential customers.

"Bottom line, for Cisco to truly capture new markets, it needs a makeover," Sizemore wrote. "Cisco is still ramping up their campaigns to reach out and develop new markets and customers that have no idea who they really are and what they can bring."

Overall, he said, Cisco's recent acquisition strategy, combined with its core competence in enterprise networking, offers better insight into why Cisco scooped up Cognio just months ago: to round out its footprint in the IP set-top box, IP video surveillance, IP digital signage hardware and software, and spectrum management markets.

"The plan is clear," Sizemore said. "If Cisco can manage and execute, they will drive new markets to feed their growth and drive the shift of video onto IP networks."

"All this stuff is here; it just needs a systems integrator," he added. "And guess what the heck Cisco does...."


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