Optical/IP Networks

Cisco Invests in P2P Video Vendor

Cisco Systems Inc. (Nasdaq: CSCO) has invested a small amount of cash in Israeli startup Oversi Networks Ltd. , a P2P traffic management system firm that specializes in video content distribution. (See Oversi Extends Second Round.)

Oversi's technology enables service providers to cache P2P content, including video, at multiple hubs spread around a network -- a technique that makes it potentially hot property as the interest in content delivery networks (CDNs) ramps up. (See Oversi: Set-Tops Next Stop for P2P Video, CDNs Show Strength, CDN Startups Talk Tough, Volpi Takes the Helm at Joost, and Babelgum Launches Public Beta.)

Oversi's caching approach is similar to that of CacheLogic , which has evolved from being a systems supplier to being a CDN operator. Its most direct competitor is PeerApp Ltd. . (See CacheLogic Fires Up Its CDN, CacheLogic Pushes Hybrid P2P, and PeerApp Awarded Patent.)

The growing interest in video distribution has led Cisco to participate in Oversi's extended second round of funding. The startup initially announced a total of $6 million back in December 2006 but has now pulled in an extra $2 million. (See Oversi Gets $6M.)

The extra tranche comes from Cisco plus two of the existing backers, StageOne Ventures and TempoPark Fund. Neither Oversi nor Cisco will say how much Cisco has put into the pot, but it's believed the IP equipment giant contributed the majority of the $2 million top-up.

Asaf Peled, a manager at Cisco's Corporate Business Development group, says the vendor regards P2P "as one of the most important phenomena in the Internet today, as it accounts for more than 60 percent of all Internet traffic in some countries today."

He says any company that has developed P2P traffic management technology for service providers is interesting, especially as more and more legal content is being distributed using P2P methods, and "Oversi is one of the first companies to address service providers' needs." (See BitTorrent P2P Store Goes Live.)

Cisco has invested in P2P technology before, of course, by acquiring deep packet inspection vendor P-Cube back in 2004. Peled says the interest in Oversi is complementary, as the Israeli firm is tackling the storage and caching of P2P packets rather than the inspection of IP traffic. (See Cisco Plucks P-Cube for $200M and Cisco Reroutes Traffic Management.)

So what happens now? Peled says it's too early to say how Cisco's relationship with Oversi will develop, adding that the investment is part of "a broad effort to address P2P needs," and is not related to the requirements of any specific video service company such as Joost .

Joost, which now has former Cisco executive Mike Volpi installed as its CEO, uses Cisco gear at its main content storage hub in Luxembourg and will likely need a more distributed video content storage approach as demands on its service grows. (See Skypsters Fast Forward to Internet TV.)

Oversi, naturally, is pretty excited about Cisco's interest. The startup's VP of strategy and legal affairs, Dr. Nimrod Kozlovski, says Cisco has been scoping out the market for technologies, such as caching, that make P2P content delivery easier for ISPs. (See Cisco Plucks P-Cube for $200M and Cisco Reroutes Traffic Management.)

"They have P-Cube for optimization, and now they're looking at solutions that can accelerate P2P traffic distribution," says Kozlovski, who adds that the two companies are now discussing a "strategic partnership" that will take their relationship beyond the initial investment.

— Ray Le Maistre, International News Editor, Light Reading

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