Cisco's Smart Move to Buy Starent
If Cisco is anything, it is acquisition-friendly. Make that acquisition-driven. And given the spread, from video conferencing to consumer video phones, some might say acquisition-manic. Just the other week the company acquired Tandberg. Its moves don't always make sense (Flip to me is a strategic Flop.), but when they do, Cisco is generally a lot smarter in its outward purchases than in some of its whacked notions to make servers internal development efforts. And acquiring Starent is a move that is exceedingly bright.
One of the problems for any large companies is continuing the growth that investors demand, even if that level of expansion is unrealistic and unreasonable. The trick is finding the open areas that are compatible with your underlying business, and that's exactly what Cisco pulled off:
For Cisco, the acquisition is a major bet that consumers and workers will keeping pulling down ever larger amounts of data onto smartphones and laptops via wireless networks. Starent's hardware and software products make it possible to create and manage high-speed data services.It's a the-risk-adverse-plop-down-real-money move, because it's such a safe prediction. The telcos have seen the results of burgeoning smartphone data use, and their reaction hasn't been pretty because the packets are piling on exponentially faster than a regulated industry can raise prices. There's data flooding in, and those who can help push the electrons are in a good position going forward.
Not only does the match make sense from customer demand, but it helps start putting Cisco into more of a central infrastructure in the wireless realm, instead of existing more on the periphery. In fact, it's perhaps a bit surprising that CEO John Chambers hasn't taken more of a liking to telecom infrastructure acquisitions. This is certainly an interesting step in that direction.
Image via stock.xchng user mzacha , site standard license.