Cisco's acquisition spree pays off

Staff writer
03 Jul 2013

Dirk Wolter, Cisco's managing director of Mobile Service Provider Architecture for APAC, says the time for a single vendor providing an entire network with a proprietary interface is over Cisco has been on a spending spree with acquisitions in the mobile network area, such as Starent for packet core, Broadhop for policy and Intucell for SON. And you also picked up Ubiquisys for small cells. How do you expect to get a return on the billions of dollars of investment?

Wolter: We saw an evolution of data, particularly of multimedia services on mobile networks, and we also saw a transition in the network infrastructure. Most of the networks we see today are built around IP networks, so IP technology is now a key technology for mobile networks. That was the perfect signal for Cisco to invest. In 2009 we made our first significant investment in the mobile space with the acquisition of Starent, which at that time was a start-up company. If you see where we are today, 50% of all IP connections worldwide are powered by our packet-core networks solutions. So clearly that investment paid off. The more recent acquisitions are very innovative start-up companies, and I expect these investments to pay off in a similar way.

What are the synergies in these diverse solutions, and what is the added value Cisco can now bring to mobile network operators?

When you look at the different investments we made, let's look at ThinkSmart, a company specialized in analytics, let's look at Broadhop for policy, let's look at Intucell for self-optimizing networks, and most recently Ubiquisys for small cells. What all these companies have in common is that they address two very specific problems for mobile service providers today. The first problem is the scalability of the network, particularly small-cell technology helps, and secondly the problem in monetizing data services.

When you run data services on a network, not just in terms of capacity, but also to make a profit on these services. So all these acquisitions are to address these key concerns.

Cisco is a leader in carrier-grade Wi-Fi solutions, and you have invested in licensed small-cell technology, so how can these be complementary?

Cisco has made massive investments in Wi-Fi, and we have experience deploying service provider data through Wi-Fi. I can tell you we've learned a lot doing that. Not just in understanding the technology better and improving the technology, but we also have a much better understanding of what the business cases are and how we can monetize it -- that is our main concern. Now we want to apply that knowledge to licensed data as well, and that led us to the acquisition of Ubiquisys. Clearly, the characteristics of 3G and Wi-Fi are different -- very different physical characteristics and very different cost characteristics, and we believe that combining these two technologies is something that service providers would definitely like to see. In addition to that, we have orchestration that manages between the Wi-Fi and licensed data access, and we now have technologies like SON, where our recent acquisition comes in, as well as ESF, which manages the connectivity between Wi-Fi and 3G -- mobility management between networks.

Is Cisco planning to take on the traditional mobile network vendors, such-as Ericsson and NSN, head-on?

I think traditional end-to-end suppliers' business was typically to supply connectivity end-to-end. At the beginning of GSM that is what service providers wanted. Today, the time for a single vendor providing an entire network with a proprietary interface is definitely over. We clearly promote open interfaces, and service providers want to pick and choose the best technology in each domain, and I'm confident that service providers will pick our technology.

Will there be any more acquisitions to help you complete your mobile network vision?

Our solutions are built around three major initiatives. We have large research and development teams to organically improve our products. We combine that with product solutions, and third, we add to that acquisitions. So across the three, you will see some extension of our portfolio that will make Cisco the leading supplier in the mobile service provider space.

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