Cisco To Acquire ExtendMedia In Bid To Ramp Up Its IP Video Services
Cisco this morning announced its intent to purchase privately-held and venture-backed ExtendMedia, a provider of software-based Content Management Systems that helps media companies and network operators manage digital video content.
Context & Ripple Effects
This is another move in Cisco's long-running attempt to grow beyond routers and switches into software-driven businesses. The template dates back to the 2007 agreement to acquire WebEx, which pulled collaboration software into the portfolio, and the pattern has accelerated since: Chambers pushed Cisco into servers last spring, launched collaboration software aimed squarely at Microsoft and IBM in November 2009, and announced the Quad social-networking product for enterprise customers in June.
ExtendMedia gives that expansion a video spine: its content management system lets media companies and network operators manage digital video, which is exactly the workload Cisco's carrier customers need help running over IP networks. The deal also fits alongside consumer-facing bets like the Flip camcorder business acquired earlier in the decade, giving Cisco assets on both the creation and distribution ends of video.
First-order effects
- ExtendMedia's media-company and network-operator customers now have their CMS roadmap set by Cisco, tying their video management stack to a networking vendor rather than an independent software firm.
- Cisco gains a venture-backed software team and product line it can bundle with its IP infrastructure sales to carriers, making video management part of the box-and-services pitch.
Second-order effects
- Rival IPTV middleware and video platform vendors face a competitor that can subsidize or bundle software with network hardware, pressuring them to seek acquirers of their own or deepen partnerships with other equipment makers.
- Operators weighing video rollouts get one fewer independent CMS option, concentrating purchasing around integrated stacks and shifting leverage toward full-line vendors.
Third-order effects
- If the acquisition-led playbook holds, network-equipment vendors will keep absorbing the software layers above the pipe — collaboration, video, content management — reshaping telecom suppliers into end-to-end platforms and squeezing standalone middleware firms out of the middle.
The trend: Cisco is assembling an IP video stack through serial acquisitions, extending the same buy-not-build strategy it used to move from networking into collaboration and servers.