I am not sure if this is a good thing or not. On the one hand, I
would expect Sipura's quality control to improve (although Sipuras are
generally high quality devices, I've heard a few reports of people
getting one that is bad out of the box, or that fails in the first
week or two of use -- fortunately these are always replaced promptly).
On the other hand, I suspect they will not be as responsive to
customer needs, nor as quick to offer firmware/feature upgrades.
But, VoIP adapters are a competitive market now. Those who remember
the early days of computer modems may remember when we basically had a
couple of brand choices, Hayes and U.S. Robotics. Now there are many
more choices available (and does ANYONE have a Hayes modem anymore?).
Same thing with VoIP adapters, we had the Cisco ATA-186 and then the
Sipura. Now Cisco is buying Sipura (and has previously purchased
Linksys, which already offers VoIP adapters based on Sipura
technology) but today there are many other companies offering VoIP
adapters, and it wouldn't surprise me if in three or four years you
can pick one up in the $20-$40 range (and that's not counting the
free-after-rebate or free-with-service-commitment deals that will
inevitably come along). It will be interesting to see if
Cisco/Linksys/Sipura retains any significant market share at that
time.
There is a thread on this at BroadbandReports.com: http://www.broadbandreports.com/forum/remark,13262331
http://newsroom.cisco.com/dlls/2005/corp_042605.html?CMP=ILC-001
Cisco Systems to Acquire Sipura Technology
First Acquisition for Linksys Division; Adds Experienced Team and VoIP
Technology
SAN JOSE, Calif., April 26, 2005 - Cisco Systems today announced a
definitive agreement to acquire privately-held Sipura Technology,
Inc. This represents Cisco's first acquisition for its Linksys
division, the leading provider of wireless and networking hardware for
home, Small Office/Home Office (SOHO) and small business
environments. Sipura is a leader in consumer voice over internet
protocol (VoIP) technology and is a key technology provider for
Linksys' current line of VoIP networking devices. In addition to
Sipura's valuable technology and customer relationships, their
experienced team with extensive VoIP expertise will help build a
foundation for Linksys' internal research and development capabilities
in voice, video and other markets.
Under the terms of the agreement, Cisco will pay approximately $68
million in cash and options for Sipura. The acquisition is subject to
various standard closing conditions, including applicable regulatory
approvals, and is expected to close in the fourth quarter of Cisco's
fiscal year 2005 ending July 30, 2005.
Consumer VoIP is rapidly expanding as independent providers and
incumbent telecom and cable operators bring VoIP offerings to
consumers. Synergy Research Group, a leading market research firm,
reports that today there are close to 8 million home users worldwide
using VoIP to make phone calls over their broadband connections. By
2009, Synergy anticipates this number to grow to 58.9 million home
users using VoIP to talk to friends and family around the world using
broadband and VoIP technology.
"VoIP is a strategic segment for innovation and growth for Cisco and
Linksys. The acquisition of Sipura will augment Linksys' leading
position in the rapidly growing VoIP market and is an example of
Linksys' strategy to increase internal R&D capabilities in specific
product categories," said Charles Giancarlo, Cisco CTO and
Cisco-Linksys president. "Adding Sipura's technology reinforces our
commitment to developing products in the consumer voice space."
This acquisition follows Cisco's core strategy of using acquisitions
to build new technologies and speed time-to-market for its
products. The Sipura acquisition accelerates Linksys' leadership in
the emerging high growth VoIP consumer and SOHO markets, provides
continued competitive differentiation for its VoIP product offerings,
and allows Linksys to better serve it customers.
Sipura has developed the technology incorporated in leading VoIP
adapters (including those integrated into home routers and gateways)
and a multi-line IP phone for the consumer and SOHO market. Sipura's
technology is currently used by Linksys in some VoIP products,
including certain analog telephone adapters and wired and wireless
routers with phone ports. Sipura currently has relationships with
regional and top-tier VoIP providers. Linksys will continue to work
with those service providers, as well as use its traditional retail
channels to target consumers and SOHO environments with Sipura's line
of VoIP products.
Upon close of the transaction, Sipura will be integrated into Cisco's
Linksys division, led by Senior Vice Presidents Janie and Victor
Tsao. Sipura was founded in March 2003 and is headquartered in San
Jose, Calif.
About Linksys:
Founded in 1988, Linksys, a Division of Cisco Systems, Inc., is the
global leader in Wireless and Ethernet networking for consumer, SOHO
and small business users. Linksys is dedicated to making networking
easy and affordable for its customers, offering innovative,
award-winning products that seamlessly integrate with a variety of
devices and applications. Linksys provides award-winning product
support to its customers. For more information, visit www.linksys.com.
About Cisco Systems
Cisco Systems, Inc. (NASDAQ: CSCO), the worldwide leader in networking
for the Internet, celebrates 20 years of commitment to technology
innovation, industry leadership, and corporate social
responsibility. Information about Cisco can be found at
http://www.cisco.com. For ongoing news, go to
http://newsroom.cisco.com.
Press Contact(s):
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Cisco Systems, Inc.
408 525-4434
emcnicho@cisco.com
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Cisco Systems, Inc.
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ksohl@cisco.com
Investor Relations Contact(s):
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Cisco Systems, Inc.
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