Article
Cisco buys digital signage company
The networking giant's purchase of Tivella could signal a major new player in digital signage.
December 19, 2006 by James Bickers — Editor, Networld Alliance
At Cisco Systems' annual conference, C-Scape, held Dec. 12-13, Chief Executive John Chambers talked about his vision for the future of his company. It was a vision in the literal sense of the word, for Chambers said Cisco would be focusing on the delivery of video content, which he called the new "killer application."
Three days later, the company announced it had acquired Tivella, a 10-employee company that provides software for digital signage networks.
"Digital signage is an emerging technology that has the potential to transform the customer experience and to promote richer communications," the company said in a press release. "Digital signage is quickly gaining traction as companies face a variety of challenges. Companies conducting deployments of digital signage solutions have clearly demonstrated higher brand awareness and sales uplift by targeting relevant information to an audience near the point of purchase."
The acquisition, scheduled to close in the second quarter of 2007, has touched off speculation within the digital signage industry: Is this the emergence of a new major player, or just another purchase by a titanic company with swelling coffers?
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A new Goliath on the block?
By anybody's standards, Cisco is a technology giant. The company, founded in 1984, currently has just fewer than 50,000 employees. With annual revenue of $30 billion and a market capitalization of $167 billion — 89 percent of its industry — its dominant role in the networking space is not up for debate.
What is up for debate, though, is whether this purchase marks a real focus for the company, or just another of its many acquisitions.
"Long story short, Cisco likes anything that drives bits over networks," said Rufus Connell, research director of information technology for Frost & Sullivan. "Telepresence uses 8-plus megs per second over the network. Digital signs should be less than that, but it would not be hard for me to envision high-definition streaming applications. This would make Cisco very happy because it would sell a lot of routers."
"... it would not be hard for me to envision high-definition streaming applications." — Rufus Connell, Frost & Sullivan |
"I'd look at it more along the lines of a tiny acquisition by a company with very large coffers, a history of branching out into related industries via their technical muscle, and a stockholder-driven need to diversify," he said. "I'd be very, very surprised if Cisco was ever able to generate a significant revenue stream from what you and I typically think of as digital signage."
Whether or not Cisco places a footprint in traditional digital signage territory, companies will have to determine what the new entrant's presence means to them. Brad Gleeson, vice president of business development for Planar Systems, called the announcement a "significant validation of the marketplace."
"It is not clear to me what this means to other digital signage companies who might partner with Cisco," he added. "I would think that digital signage software companies would now need to assess whether Cisco has become a competitor, or whether this software is more infrastructure-oriented. The other question is whether Cisco plans to purchase and participate in other segments of the value chain."
Alex Richardson, president of Selling Machine Partners, said digital signage companies will have to figure out how to become one of "Goliath's little helpers."
"That is, create simple applications that leverage the Cisco offering," he said.
In the announcement of the Tivella acquisition, Cisco's senior vice president of emerging market technologies Marthin De Beer said his company sees potential to provide live video, video-on-demand and other rich content for targeted communications, advertising and training.
To Connell, it's a logical fit with Cisco's existing offerings, and will be a powerful driver for digital signage in general.
"The Tivella acquisition is right in line with the rest of Cisco's strategy to develop or own applications that will drive lots of bits across the network," he said. "The interesting part is that Cisco can offer some pretty neat solutions beyond traditional digital signage, like high-def streamed shows. I'm not sure the market is ready for this yet, but having another 600-pound gorilla in the market will certainly help drive installs of digital signs worldwide."
About James Bickers
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