Cisco and Scientific Atlanta
Today Cisco announced that it would be purchasing Scientific Atlanta, for close to 7 Billion dollars. Which after taking Scientific Atalanta’s cash into account will mean the actual cost is closer to 5.3 Billion. Most of the sources are speculating that this is the expression of Cisco’s desire to move deeper into the consumer market. But I think that it’s more than that and Cisco already has a plan for this acquisition.
As Chris mentioned in his post, digital media convergence is happening and Cisco knows it. Today their CEO made mention of the service provider’s “triple play bundle” consisting of video, communication, and online services.
What does this mean? Think about it, Cisco, already has a consumer prescence, with Linksys. Linksys offers a number of products, including wireless access points, amedia center extender, network attached storage devices, and VoIP solutions. Sounds like a pretty solid offering. They even offer devices which combine some or all of these features. There is however one important feature missing. The ability to watch TV.
Not any more, with the acquisition of Scientific Atlanta, Cisco now has the technology, established relationships, and contracts to make them a major player in the set top box market. What does this mean? It means that along with your single bill and point of service for voice, data, and video. You’ll also have a single box. No more cable or dsl modem, no more wireless access point, no more set topbox for TV. Instead one device will allow you to watch TV, wirelessly browse the internet, stream content from your PCs, and act as a VoIP adapter. Plus, with Cisco’s network experience, I’m hard pressed to find a reason you won’t find this solution offered on system’s such as Verizon’s FiOS, as well as standard cable systems. I can’t wait to see what comes of this, I think that Cisco has made a great play that will keep them ahead of the game in the coming years.
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One combined box for my TV, phone, and internet modem would be sweet. I wonder if they will be able to charge a premium for their box. Or is this kind of convergence expected by consumers? The new box will have to cost less than buying all three separate.
Even without this kind of pricing power, Cisco/Scientific Atlanta should be able to eat up a lot more of the market share in all three of those hardware spheres. That’s enough karma for the deal, I think.
I have one question also. We’re talking hardware here. What services are lined up to do business with Cisco/SA?
As far as charging a premium, when we’re talking about set top boxes, we have to remember that by and large these devices are rented to the consumer. So charging say 15-20/month for one of these all in ones, as opposed to 10 which is what most cable companies are charing for DVR’s and or HD (and this doesn’t include additional services fees) should be quite easy.
With regards to who’s lined up to work with Cisco/SA, I know that Scientific Atlanta works with at least three of the largest cable providers, Time Warner, Cox, and Comcast. I’m pretty sure that they provide set top boxes to most other cable providers as well, but I’m not positive. And, as I mentioned, given Cisco’s experience with networks I have a hard time believing that they won’t produce a version that would work with phone companies’ upcoming services.
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