So whatever happened to Cisco's traditional M&A strategy of buying
technology as opposed to big companies where resolving cultural
differences can make acquisitions difficult? It seems like this
approach has been thrown out the door as Cisco is buying Scientific-Atlanta for $6.9 billion (it's really $5.3 billion given SA has $1.6 billion of cash). Whether or not this move is seen as unorthodox, it's brilliant
because Cisco now has a major and leading presence in the digital
household, which is poised to take off as high-speed Internet networks
make it easy for carriers and cablecos deliver all kinds of new
services. Let's be clear here, Linksys was a nice business but selling
routers in a competitive market is far from earth-shattering. On the
other hand, SA is poised to become the gateway to the digital home. The
"big pipe" that comes into the home will, in many cases, be connected
to SA's set-top box, which means Cisco will play a key role in how new
services are delivered. In particular, SA will give Cisco a crucial
role in the video business, which is booming as cablecos upgrade their
networks to implement VOD and PVRs while telcos scramble to launch
IP-TV.
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