Cisco Invests in ip.access

Femtocell vendor ip.access Ltd. has today announced that Cisco Systems Inc. (Nasdaq: CSCO) has invested in the company. The move shows the growing interest in the tiny home base station market. (See Femtocells Brace for Big 2008.)

Following its $330 million acquisition of WiMax vendor Navini Networks Inc. , Cisco is now reaching into the femtocell market. The move also follows Google (Nasdaq: GOOG)'s strategic investment in femtocell vendor Ubiquisys Ltd. last year. (See Cisco Buys Navini for $330M, Google Invests in 3G Startup, and Femtocell Startup Pockets $25M.)

But it's not the first time the networking giant has been tempted by home base stations. In 2000, the company acquired JetCell for $200 million, which developed a technology very similar to today's femtocells, but for the corporate market. Also, Unstrung reported that Cisco was sizing up investment opportunities in femtocell vendors early last year. (See Cisco's Convergence Boomerang and Cisco Eyes Home Base.)

"It's very exciting for us that we have this validation from such a fantastic investor," says Andy Tiller, vice president of marketing at ip.access. "Having Cisco will give us a big advantage." (See LR Names 2007 Leading Lights Winners.)

The femto vendor is one of the suppliers chosen by Vodafone Group plc (NYSE: VOD) for its femtocell trial. The other is Alcatel-Lucent (NYSE: ALU). (See Vodafone Picks Femto Vendors and Vodafone RFP Fuels Femtocells.) Cisco did not reveal how much it has invested. The company also did not say much about what it plans to do with femtocells or how the technology might fit into its wireless or home networking strategies.

"Our intent and purpose of our investment in ip.access is to learn more about this technology," says a Cisco spokesman. "For ip.access, we hope to provide the benefit of our industry contacts as well as our expertise in IP networks."

Cisco has at least two business divisions into which femtocells seem a natural fit: Linksys wireless networking and Scientific Atlanta 's set-top boxes. Femtocells could potentially be integrated into either of these platforms. The home base stations could also add a bit of flesh to the company's Human Network home networking strategy. (See CES: Cisco's 'Human Network' Has Bones, Cisco: Do-it-All Gateway on the Way , Cisco Buying Linksys for $500M, and Cisco to Acquire Scientific-Atlanta.)

"Any discussion about product or technology integration would be premature," says the Cisco spokesman. "But the investment is in line with our service provider mobility and wireless networking businesses."

In ip.access's view, femtocells will play an integral role in bringing mobile phones and devices into home networks. "Femtocells… enable mobile phones to connect into the home network," says Tiller.

Ip.access is already working with Thomson S.A. (NYSE: TMS; Euronext Paris: 18453) to integrate its femtocell technology into a home gateway. Tiller says the investment from Cisco does not affect the partnership with Thomson. (See Thomson, IP.access Team and Femto Players Gun for Gateways.)

— Michelle Donegan, European Editor, Unstrung

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