Cisco's TV Debut - InformationWeek

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Cisco's TV Debut

Whither data goes, so goes Cisco Systems. That philosophy helps explain why Cisco is banking on video with last week's $6.9 billion acquisition of the largest maker of cable-TV boxes, Scientific-Atlanta Inc. It's the second-largest buyout ever by the always-acquisitive Cisco and thrusts it squarely into the fight to be at the center of people's home networks of voice, data, and video.

Scientific-Atlanta brings Cisco into the video-over-IP arena, which the company believes will be a $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," Cisco CEO John Chambers said in a conference call last week. "The opportunity for Cisco is to dramatically reduce the complexity of converging voice-video."

Phone companies such as SBC Communications Inc. and Verizon Communications Inc. are anxious to provide video over IP using DSL lines, as cable companies such as Cox Communications Inc. extend their offerings with digital-video recordings and digital cable. Cisco already supplies many telecom and cable-TV service providers with their networking infrastructure and predicts the Scientific-Atlanta arm could grow as much as 16% annually in the next few years. "Increasingly, the next-generation networks will be built with video in mind first," says Mike Volpi, senior VP of Cisco's service provider and router groups.

Cisco hopes to extend the reach of Scientific-Atlanta's boxes by integrating them with another Cisco acquisition: Linksys' home networking routers.

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