Cisco Systems officials are expecting video to increasingly dominate Internet traffic and are buying ExtendMedia as the latest move to bulk up their growing video capabilities.
Cisco announced its intent to buy privately held ExtendMedia Aug. 26. Financial terms of the deal were not disclosed.
ExtendMedia would be only the latest acquisition by Cisco, which already offered homegrown IP video products, such as its TelePresence portfolio. Cisco earlier this year closed its $3.4 billion deal for Norwegian telepresence equipment vendor Tandberg and last year bought Flip video camera maker PureDigital.
With ExtendMedia, Cisco gets a company with expertise to manage and monetize IP video across a wide range of platforms, from PCs and laptops to mobile devices and IT TVs, according to Cisco officials.
"As the video market transitions and consumers expect multiscreen engagement, service providers are enhancing their infrastructure to manage and deliver video to any device while providing a rich user experience," Enrique Rodriguez, senior vice president and general manager of Cisco's Service Provider Video Technology Group, said in a statement. "ExtendMedia will strengthen Cisco's position in the delivery of IP video services by enabling service providers to provide a more interactive and personal experience and to optimize quality for consumer viewing devices."
ExtendMedia's flagship OpenCASE platform helps customers manage, publish and deliver video content services to PCs, televisions and mobile devices, according to company officials. These consumer-facing services come in a variety of formats and operating models, including streaming, secure retail and on-demand services, the company said.
Cisco officials said ExtendMedia's CMS (content manage system) software will be integrated into their IP video products. Employees of the 19-year-old company will become part of Cisco's Service Provider Video Technology Group, as well as Cisco's sales and services units, according to Cisco.
The company expects to complete the acquisition of ExtendMedia in the first half of its 2011 fiscal year which began this month.
Cisco officials have predicted Internet traffic to quadruple over at least the next four years, with more than 90 percent of it including video of some sort.
Brian White, an analyst with Ticonderoga Securities, said that given the expected boom in IP video traffic, Cisco's purchase of ExtendMedia makes sense.
"The ExtendMedia acquisition enhances Cisco's IP over video capabilities and positions the company to capitalize on the trend toward streaming video over the Internet across any devices, while offering a more integrated utility package for customers," White said in an Aug. 26 research note.
He also pointed to Cisco's release in March of its CRS-3 router, which is designed to help increase the use of video over the Web.