Cisco Pays $120M for Pure Play

Cisco Systems Inc. (Nasdaq: CSCO) is set to buy Seattle-based startup Pure Networks Inc. for $120 million in an effort to be a major player in what it calls the "Home Networking 2.0" market.

Pure has developed software that, the specialist says, "simplifies network configuration, assists with troubleshooting, and delivers a secure, reliable and effortless way to share printers, files, pictures and more." It has also developed technology that enables service providers and other vendors to develop home networking applications for their customers.

That's the sort of technology Cisco believes is about to become critical in the race to help control the home networking environment.

The IP equipment giant reckons the industry is about to shift from "Home Networking 1.0, in which home networks are largely designed to share a broadband connection that links PCs and peripherals," to the next level, where "the multimedia-enabled home will be comprised of a multitude of disparate network devices, applications and services that are connected to one another."

And Cisco isn't the only company with the living room built into its strategy -- Alcatel-Lucent (NYSE: ALU) recently announced the acquisition of remote broadband management player Motive , which, according to AlcaLu, has developed "solutions allowing better visibility into home networks." (See AlcaLu Gets Motivated and AlcaLu to Buy Motive.)

In addition, the French trio of Orange (NYSE: FTE), Sagem Télécommunications SA , and Thomson S.A. (NYSE: TMS; Euronext Paris: 18453) are targeting the home networking space with their Soft At Home joint venture, while Microsoft Corp. (Nasdaq: MSFT) wants a piece of the action with its MediaRoom platform. (See French Firms Take On Microsoft.)

Cisco already knows Pure Networks well, as it has worked with the startup to develop the Linksys Easy Link Advisor (LELA) home network management product. The acquisition will enable "further development of the existing LELA platform which will serve as the base for new multimedia-enabled applications, tools and capabilities," notes Cisco in today's announcement.

It will also give Cisco a new product to sell to broadband service providers, as Pure's technology can be used for the remote management of home networks, something that will appeal to carriers and cable operators looking to extend their managed services portfolios into the consumer market. (See MSOs, Telcos Dash for Home and MSOs Juice Up for a Home Networking Run.)

Cisco expects the deal to close during the first quarter of fiscal 2009 (so, by the end of October 2008), after which Pure Networks will become part of the giant vendor's Linksys group.

— Ray Le Maistre, International News Editor, Light Reading