Cisco Drafts Dynamicsoft

Cisco Systems Inc. (Nasdaq: CSCO) says it will acquire Dynamicsoft Inc., a Session Initiation Protocol (SIP) infrastructure software vendor, for about $55 million in cash, including the assumption of about $3.8 million in debt.

Dynamicsoft was founded in 1998 and now has 104 employees. Upon close of the acquisition, the Dynamicsoft organization will report to Don Proctor, VP and general manager of Cisco's voice technology group.

The company makes the kinds of software platforms that help route calls, text messages, emails, and other communications over both wireless and wireline networks. The company has more than 100 customers, including Vonage Holdings Corp.

Vonage provides its VOIP service by reselling Cisco's ATA (analogue telephone adaptor) device and licensing software from Dynamicsoft and media servers from Convedia Corp.

Cisco Systems has the biggest market share in VOIP systems and the largest number of SIP phones shipped, according to Heavy Reading's May 2004 report, "SIP Hosted Services: A Heavy Reading Competitive Analysis."

"However, Cisco's product is still based on the vendor's proprietary SCCP protocol (a version of MGCP – Media Gateway Control Protocol), and while it supports SIP trunks, it does not offer some key SIP functionality, such as presence management," writes the report's author, Margaret Hopkins.

"We have added call features that were losing us contracts; we haven't lost deals for lack of SIP support," Cisco told Heavy Reading at the time.

Apparently, to Dynamicsoft's good fortune, Cisco's lack of SIP functionality may indeed have been losing it some contracts.

— Phil Harvey, News Editor, Light Reading