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Reasons Cisco won't sell set tops

By PETER WHITE

Published: 24 February, 2012

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We sometimes wish that analysts who decide on a slow Friday to leak merger rumors, like Cisco selling off its set top box division, would either think it through or check the logic with us. We cannot see Cisco selling what was once Scientific Atlanta for a number of reasons - and Cisco was swift to use a blog to deny the idea.

First off it would go for far less than the $7 billion the company paid for it, unnecessarily putting red ink all over a perfectly good year for Cisco. Secondly there is no sensible home for the division, which can afford it - unless you count Motorola, soon to be part of Google as a sensible home for Cisco set tops; and finally it would shoot a hole in the Cisco IP video strategy which includes its core business in IP routers and switches, as espoused in its Videoscape cloud platform.

Cutting resources internally and jazzing the product line up, seems a far better idea, and potentially Cisco might buy one or more of a number of companies, to give it the number one spot in set tops globally for the first time - for instance it could buy the Motorola home division from Google , and although this would be perhaps throwing good money after bad, it would pick up the market lead in IPTV set tops, and that would be worth something, along with all the IPTV start-ups that Motorola now owns. There are smaller, cleverer purchases out there with some great products, with clear leaders who would, for the first time, put Cisco to the top of the set top tree, and perhaps stay there.

We do not expect Cisco will not make a false move in its IP strategy, it is too expert and there are too many checks and balances internally. It has proved itself a master of mergers and acquisitions in the past, and none of them have been found back out on the streets again, a Cisco orphan. So we do not think it will sell its set tops, at least not for now.

For a deeper analysis of this story, go to www.rethinkresearch.biz/faultline and request this week's issue or a four week trial of Faultline, the paid weekly sister paper of Rethink-TV.

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