Cisco Strategy Goes from Smart to Brilliant with MOTO Acquisition

In the high tech industry, acquisitions usually have tried-and-true reasons. Company A acquires B to gain some technical expertise, expand to a new market, or keep a weapon out of the hands of competitors. Cisco (CSCO) is no stranger to acquisitions for all of these tactics. But the company's announcement that it will buy MOTO Development Group puts it into genius territory. Instead of a product line or given technology, Cisco acquires general expertise that could boost all its product development.

MOTO is a product development and strategy consultancy with clients that range from start-up to Fortune 500. As is true with such firms, it uses market research and consumer trend data to inform smarter strategic product planning and design. Although they generally appear in the background, design firms have played huge roles in product from such name high tech companies as Apple (AAPL), Motorola (MOT), Sony (SNE), Microsoft (MSFT), Seagate (STX), and Yahoo (YHOO). They can combine consumer insight and industrial design in ways that few corporations have been able to do purely on their own.

That's why this acquisition was so smart. Instead of going for a typical strategy, it gains an asset that it could apply across all its growing list of consumer product lines, from Linksys networking hardware to the Flip video camera. MOTO's client list has included Apple, Microsoft, Sony, Hewlett Packard (HPQ), Motorola, Intel (INTC), Logitech (LOGI), Casio, and Ricoh.

MOTO's two co-founders have significant experience. J. Daniell Herbert was a researcher at MIT's AI lab and an Apple advanced manufacturing systems researcher. Gregor Berkowitz focuses on start-ups -- a big consideration, given Cisco's overall acquisition strategy â€" and worked with companies across Asia prior to co-founding MOTO. (Disclaimer -- he's a regular contributor to our sister site CNET, although I didn't make the connection until reading his biography as I prepared this post.)

This is an unusual and smart move by a company known for its intelligent acquisition. Not only does it gain important market expertise, but also it pulls the knowledge and insight away from competitors.

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