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Cisco Arms for IPTV Battle

Cisco Systems Inc. (Nasdaq: CSCO) is beefing up its IPTV attack, with a systems-integration business underway for service providers and a couple of new products added to its metro Ethernet lineup today.

It's all meant to counter Alcatel (NYSE: ALA; Paris: CGEP:PA), which has surged in the router rankings with its 7750 and 7450 boxes. Ethernet has been the key, with the 7450 gathering the Gigabit Ethernet pipes that would carry IPTV feeds, handing them off to the 7750s for routing. (See Alcatel Router Revenues Surge.)

But it's Alcatel's role as a systems integrator that has Cisco tied in knots. There, Alcatel has bagged some big-name deals such as the lead role in Project Lightspeed for SBC -- er, AT&T Inc. (NYSE: T) (See Mais Alors! Alcatel Bags $1.7B SBC Deal .)

"What we lacked was the systems integration arm. We didn't have the services component," says Mark Milinkovich, director of marketing for Cisco's service provider products.

Cisco indicated that this was part of the thinking involved in acquiring Scientific-Atlanta Inc. That deal, expected to close sometime this quarter, will seriously alter Cisco's outlook when it comes to services like video and IPTV. (See Sci-Atlanta: Cisco's IPTV Lifeline?.)

Even without Scientific-Atlanta, Cisco has begun to offer systems integration to carriers via its IP NGN Expertise Center, launched in October. Part of its goal is to give Cisco extra ammunition for certain large accounts -- those measuring in the hundreds of millions of dollars.

"We've chosen the partner role in the past, but we're being asked to take this role on an account-by-account basis," Milinkovich explains. One example would be with Indian carrier Bharat Sanchar Nigam Ltd. (BSNL) , where a 96-POP deployment involved Cisco and 90 partners. (See Cisco Pays to Play in India.)

Considering that integrators are often accused of favoring their own products, Cisco's product breadth could make things awkward. However, the company's move into this area makes sense when you look at telecom-related competitors such as Alcatel, Lucent Technologies Inc. (NYSE: LU), Nortel Networks Ltd. , and Siemens AG (NYSE: SI; Frankfurt: SIE).

"All the big telecoms companies have their systems integration or network integration arm, and it's a good business," notes Michael Howard, principal analyst with Infonetics Research Inc. "Carriers like it. When we ask how they chose the manufacturer -- not the products -- the pre- and post-sale support is always near the top of the list."

Perhaps best of all, carriers are accustomed to paying for this kind of thing, Howard adds.

Separately, Cisco today announced more equipment for its carrier Ethernet arsenal. Metro Ethernet is getting lots of attention from Cisco in general, but it's particularly important given the Ethernet densities that are expected to come with IPTV deployments.

The ME 6524, launched today, is the follow-up to Cisco's ME 3400 switches announced in October. The ME 3400s featured a copper Ethernet link to end customers and a fiber uplink; the ME 6500s, based on technology from the flagship Catalyst 6500 switches, used fiber to aggregate ME 3400 traffic and forward it deeper into the network. (See Cisco Beefs Up the Edge.)

The "ME" series is aimed at carrier metro Ethernet buildouts, with Cisco touting that the boxes have passed MEF certification requirements. (See MEF Rubber Stamps Ethernet Gear and MEF Certifies QOS.) What's curious about the series is that Cisco already sells carrier Ethernet equipment and is pegged as a leader in the category. Unlike other Cisco switches that started life in enterprise networks, the MEs are intended solely for carriers. "I guess they've decided, marketingwise or strategywise, that it's important to specify this market," Howard says.

Cisco also launched the ONS 15310-MA for metro access -- the sequel to the ONS 15310-CL, a multiservice provisioning platform for the customer premises. (See MSPPizza to Go at Cisco.)

— Craig Matsumoto, Senior Editor, Light Reading

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Mark Sebastyn 12/5/2012 | 4:05:27 AM
re: Cisco Arms for IPTV Battle Linksys is where they should be looking for a solution.... not Scientific Atlanta.
Mark Sebastyn 12/5/2012 | 4:05:27 AM
re: Cisco Arms for IPTV Battle Cisco is going to have a very tough go at providing an end-to-end solution.

Cisco has always stuggled to provide carrier class solutions, regardless of what the Cerent 15454 folks have said and claimed. Alcatel is the opposite- they are a premier carrier supplier, and now they have low cost Chinese manufacturing and design (Shanghai Bell) to pump out cheap CPE products.

I think Scientific Atlanta shareholders got to exit right at the peak. Cisco is going to get caught holding the bag. There are many different threats emerging that could kill off the traditional set top box. Tivo. Apple iPod. One of my favorites is the Xbox360 and Microsoft Live.

http://www.nyquistcapital.com/...

http://www.nyquistcapital.com/...
paolo.franzoi 12/5/2012 | 4:05:26 AM
re: Cisco Arms for IPTV Battle
I think y'all are overestimating the demise of broadcast TV.

60% of homes in the US are still on analog cable. There might be a fight for the high end homes, but no upper middle class executive is basing his home entertainment center around an Xbox game console. No matter how much they want it to be something else. These are the guys who buy gold wire for their stereo connections.

What Microsoft might be doing is setting themselves up for a potential home entertainment takeover 10 years from now.

seven
Pete Baldwin 12/5/2012 | 4:05:26 AM
re: Cisco Arms for IPTV Battle Schmitt -- Good points, and I agree to some extent. But your second post misses the mark, i think ... it's not a matter of cisco looking towards SA instead of LinkSys. Rather, Cisco's invasion on the living room will be some combination of the two, something SA couldn't do on its own.

And don't forget SA was acquired for its infrastructure play too, not just the set-top. In the long run, that stuff might turn out to be the more important piece of the acquisition.

There are many different threats emerging that could kill off the traditional set top box. Tivo. Apple iPod. One of my favorites is the Xbox360 and Microsoft Live.

Not Tivo or Apple, but: I do think a Living Room war is imminent, pitting Intel/MSoft vs. Cisco vs. SONY. I do think Cisco will have a good showing here; I would hope/presume that they realize exactly what you're saying about the STB and are looking at something beyond it.
FiberFan 12/5/2012 | 4:05:26 AM
re: Cisco Arms for IPTV Battle If the goal is to use Linksys as a "user installable set top box" they have a long way to go. Having owned a small business network consulting company, the Linksys was one of the most problematic boxes we saw. Features that were set up correctly that didn't work and "undocumented" features that worked great (unfortunately).
They are really behind on this one. Should be an interesting race.

Does anyone else think that Nortel will buy someone like Maytag to do it's SI work for IPTV??
just curious.
FF
alchemy 12/5/2012 | 4:05:26 AM
re: Cisco Arms for IPTV Battle The trend in the cable space is to push the functionality into the TV. Like it or not, analog is going away. There are going to be uber-cheap converter boxes for legacy television sets. New TVs will be supporting 2nd generation cable cards. Broadcast TV is also going digital and all the people with rabbit ears are also going to have to buy a cheap converter box.

Linksys is just a brand. They take reference designs and software from chip vendors and 3rd party software suppliers and stuff it in their plastic. There's not a heck of a lot of Linksys IPR in any of their products. SA took pretty much the same approach with their cable modems and VoIP/Cable Modem MTAs. It's the only rational choice when you're making extremely low margin, high volume products. If you have to put $25 million in NRE into engineering one of these products, you'd never enter the business. Unfortuantely, this puts product quality at risk since a Linksys relies on their suppliers to get it right.
Sisyphus 12/5/2012 | 4:05:25 AM
re: Cisco Arms for IPTV Battle Scientific Atlanta does more than just set top boxes. Cisco didn't but them for that alone, come on. Think about customer base, know how, and infrastructure. Even this early, the strategy already seems to have stopped wide-spread initial perception that IPTV is just about VPLS and how many q's the aggregation system supports.
jes 12/5/2012 | 4:05:24 AM
re: Cisco Arms for IPTV Battle Cisco is trying to regain the lost ground to ALA in the IPTV space. And it know video is a big thing thats going to increase the bandwidth usage thereby asking for a bigger routing/aggregation infrastrcture.

This new ME ethernet aggregation product will take head on the ALA 7450 boxes. And SA infrastrucutre business will add fuel to Cisco's claim to be a systems integrator.

Big question... Is Cisco alone can tackle the ALA/Microsoft combination ? or is SA aquisition enough for Cisco to make in roads into IPTV space ?
Mark Sebastyn 12/5/2012 | 4:05:22 AM
re: Cisco Arms for IPTV Battle Some of you have said that SA is not just about the set top box.

Agreed they hav products outside of that realm, but it's really the Set Top box that they had a strategic customer advantage in.

If Cisco wanted the back end, there are other, smaller companies that would have been better acquisitions.
gregldoyle 12/5/2012 | 4:05:18 AM
re: Cisco Arms for IPTV Battle It's not about the STB, it's about the integration of large systems such as the head end facilities, the satellite downlink systems and control centers.
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