Global Insight Perspective | |
Significance | Cisco has continued its acquisitive streak with the acquisition of WiMAX vendor Navini, entering the wide-area radio access network market for the first time. |
Implications | Navini has been winning customers and the product portfolio will complement that of Cisco, already a strong player in the network back end. |
Outlook | This is a change of strategy for Cisco, which had explicitly stayed out of the radio access network market, but the acquisition builds on its strengths in IP networking and will help deliver a vision of both converged services and broadband connectivity in developing markets. |
Cisco—which has previously been explicit in rejecting entry into the market for radio access networks beyond WLANs, focussing instead on supporting the IP network infrastructure and IP services layer—has made a move to expand into this product field by acquiring privately held Navini Networks, based in Richardson, Texas (see North America: 3 July 2007: Vendor Strategies in a Converging World—The North American Vendors).
Cisco praised the product portfolio of Navini, which includes integrating 'Smart Beamforming' directed connectivity and Multiple-In Multiple-Out (MIMO) antenna technologies that improve performance and range. The product portfolio includes base stations, adaptive antenna arrays, management systems, and subscriber modems. Tony Bates, senior vice-president for the Service Provider Technology Group, noted that the customer premises equipment is portable and easy to set up, simplifying network management. These will be added to Cisco's Wi-Fi and Wi-Fi Mesh product portfolio, which was previously targeted at enterprise users, allowing Cisco to target service providers with an end-to-end radio access network solution. For service providers, Cisco had previously possessed a product portfolio that targeted the back end of the network with a range of switches, routers and backbone transport solutions using IP (Internet Protocol), MPLS (Multi-Protocol Label Switching) and IMS (IP Multimedia Subsystem) service platforms, but avoided producing its own radio base stations. WiMAX is a data-centric, IP-based technology that complements these products.
The acquisition is also intended to expand Cisco's presence in emerging countries as part of the Country Transformation and "Digital Inclusion" initiatives. Developing countries are leapfrogging wireline technologies and deploying wireless networks to provide connectivity at lower deployment costs with WiMAX, a key standards-based technology that benefits from the interoperability and economies of scale that will drive this trend forward.
Brett Galloway, vice-president and general manager of the Wireless Networking Business Unit, Cisco, noted that: "Around the world broadband wireless networks based upon WiMAX have the potential to add millions of new Internet users who cannot be reached economically using copper or fiber infrastructures. Additionally, WiMAX networks will help drive the transition to open IP-based broadband wireless architectures and accelerate the rollout of new applications and services".
The acquisition is agreed for US$330 million in cash and assumed options and is expected to close in Cisco's second fiscal quarter of 2008 (end of January 2008). Navini will be integrated into the Wireless Networking Business Unit under the Ethernet and Wireless Technology Group.
Outlook and Implications
Cisco has made several acquisitions in the wireless networking space, but until now has avoided the service provider radio access network, instead targeting mainly corporate and enterprise mobility, adding to the portfolio of WLAN products and acquiring Cognio, whose product helps with effective network design and management (see World: 13 January 2005: Cisco to Acquire WLAN Vendor Airespace for US$450m and 19 September 2007: Cisco Acquires Wireless Networking Company Cognio). Branching out into municipal Wi-Fi was the first indication of the company's ambition to deliver wider-scale radio access network solutions (see Canada: 27 July 2007: Cisco Deploys Municipal Wi-Fi in Saskatchewan). Wi-Fi designed and intended for in-building or local area coverage is largely proving to be the wrong solution to the Metropolitan Area scale networking IP-based conundrum. By developing a portfolio of WiMAX products that will easily integrate with the IP-centric strategy, Cisco has pursued a logical step in meeting its vision for a converged future where the boundaries between networks are blurred (see United States: 14 March 2007: Municipal Wi-Fi Fails to Meet Expectations and 11 January 2007: Cisco Demonstrates Future for the Converged Consumer).
WiMAX has been building momentum with a steady stream of WiMAX network deployments in progress and the recent inclusion of a specific implementation of WiMAX as a 3G technology recognised by the ITU (see World: 22 October 2007: WiMAX as Part of 3G—a Boost or a Step Back?). While missing out on the large national U.S. deployment by Sprint and Clearwire, which tapped Motorola, Samsung and Nokia as network partners to ensure a device ecosystem is developed, Navini has been a significant winner of contracts for its Smart WiMAX solutions. Cisco states that Navini has some 75 customers (see Bulgaria: 16 October 2007: Max Telecom Goes Mobile WiMAX, United States: 19 June 2007: Wi-Com Readies WiMAX Launch in Nine Cities, Zambia: 18 May 2007: Zamnet Awards Wireless Broadband Contract to Navini Networks). Cisco has watched the growing market for WiMAX products that fit easily into its current IP-based product portfolio and has identified a market opportunity that could not be ignored, which also allows it to provide the end-to-end solution increasingly demanded by customers—previously met through partnerships with other vendors.