The Stalwart: Is Cisco Back up to Old Tricks?

Now that Cisco has made it clear that their strategy is to target the consumer market, both explicitly, and implicitly (with a $6.9 billion buyout of Scientific-Atlanta), the question naturally turns to, who will Cisco buyout next? After all, this is Cisco we're talking about, the kind of acquisitions, a company whose only core competency, arguably, is integrating other companies into it. If the networking market ever disappears, they could certainly start a consulting firm advising other companies in this area

Yesterday, Marguerite Reardon, from CNET, speculating that Tivo may be the next target:

The question now is, who's next? Will Cisco take a hard look at troubled but well-known TiVo, the maker of digital video recorders? What about Nintendo, maker of video game consoles? Or what about Sling Media, a start-up with technology that lets people watch cable television on their laptops or mobile devices with a broadband connection?

Though Cisco executives certainly won't say who they're looking to buy, there are some hints as to which consumer electronics companies they're considering for partnerships.

According to a source familiar with Cisco and TiVo, there's a "potential for an interesting partnership" to emerge between the two companies. TiVo, the source said, has held discussions with many potential partners.

There's no indication that Cisco is looking to buy TiVo, and details regarding a potential partnership are scant. But Cisco's recent acquisitions do suggest how serious the company is about becoming a major presence in the living room, and TiVo carries weight as a well-known consumer DVR brand. At the same time, Cisco could help TiVo regain the distribution clout it lost when satellite TV provider DirecTV said it was walking away from a longtime partnership with TiVo.

Representatives from both Cisco and TiVo said they would not comment on rumors.

It's difficult to see, from our perspective, how any value is created in melding Linksys, and Scientific-Atlanta and Tivo, than if these three remained standalone brands. Unlike in their networking glory days, when they could buy up a small upstart, simply for a piece of a technology (like some revolutionary optical switch), and then scale it up to sell it as part of their package, these kind of consumer electronics products can't easily be scaled up. Furthermore, having the Cisco backing does relatively little for these companies with well established brands. Most importantly, consumer electronics is hot hot hot right now. Slingmedia, mentioned in the article, just closed a round for $46 million in venture capital funding. Why should we assume that by entering a hot market, that everybody knows is hot, that is very well capitalized, Cisco can find a way to break out? We agree, with this author however, that knowing this company, they will certainly try.