Cisco going after everything but macro?

Networking vendor Cisco, cresting the wave of IP integration, has been taking major strides into the telco world in recent weeks through a host of acquisitions, including LTE small-cell specialist Ubiquisys, policy management solutions firm BroadHop and SON software provider Intucell. The 66,000 employee-strong,  $8bn per year profit making business is well placed to exploit the opportunity in the telecoms space.

“Cisco’s heritage is in IP and data communications, and as the networks begin to look more like regular IP networks, it starts playing more and more to Cisco’s hands,” said Daryl Schoolar, Ovum’s principal analyst covering the wireless infrastructure space at the research firm.

Of course, Cisco is not moving into entirely foreign territory, it already has experience of working with operators by supplying them with packet core solutions over the years, and as Schoolar points out, many if not all operators most likely already rely on Cisco’s equipment, for technologies such as unified comms solutions or datacentre products. However, what it can now draw on when taking these latest steps towards mobile operators is the firm’s deep understanding of data networks and how to manage data.

“Cisco has for several years been talking about network modernisation and network monetisation, and that’s a line of discussion you’re hearing from network infrastructure vendors today,” says Schoolar. “When Cisco first started talking about it, there were one or two concepts that were a little hard to understand but today, people have a better understanding.”

It’s a trend that is not limited to Cisco, software provider Oracle is also eyeing a higher profile role in the mobile network, evidenced by its $2.1bn acquisition of unified communications software maker Acme Packet and signaling, policy control, and subscriber data provider Tekelec.

“More and more IT companies looking at what can they leverage from their past and their history in IT, and trying to see where they can fit in the telecoms space,” said Schoolar.

For Cisco, this means everything but the macro network. The network infrastructure market already has five large enterprises dominating the space: NSN, Ericsson, Alcatel-Lucent, Huawei and ZTE. Schoolar believes that due to the market congestion Cisco will not set out to compete in this space.

“Cisco doesn’t want to compete with the macro vendors, and I don’t see how they would fit into that,” said Schoolar. “But as we’ve seen, they have gone after all the other pieces in mobility.

“Cisco has probably been thinking where is the future of networks? And it’s in mobility. What are the inflection points in the network that they can get into since they aren’t in the macro space, but in basestations? So that’s what they’re focusing on – these new emerging areas that give room for data analytics, SONs and small cells.”