Cisco, no slouch in the world of streaming video to start with, may have made an over-the-top (no pun intended—or maybe a little one!) move by announcing it’s acquiring OTT video software company NDS. The move, I think, may be one of the biggest Cisco has made in the last decade, and it poses a major threat for Cisco’s competitors.
NDS is interesting because they’ve focused on supporting a practical video ecosystem and not just a romp on the streaming bandwagon. They have highly modularized, highly orchestrable, video components but they also have one of the broadest video-service portfolios in the market, which means that they can address nearly anything in the way of opportunity. Their stuff is API-based, easily customized and exposed to developers, integrates across service boundaries…in short, it’s a pretty complete service layer. Maybe even the most complete now available.
For Cisco, NDS could be a killer idea—literally. There are three monetization pillars that control strategic engagement with operators; cloud, mobile/behavioral, and content. Cisco has a leg up in terms of cloud strategy among the network equipment vendors, because of UCS. This week, recall, Cisco upped the UCS ante with new server platforms and a new fabric-connect architecture that leverages its combined position in servers and networks. Cisco has been less successful has been in mobile and content. One win and two losses doesn’t add up to Chambers’ kind of sales math, and content is potentially golden for a company like Cisco because it not only gives them a new monetization engagement path, it gives them another path to mobile victory as well. Might Cisco be wrapping up all the valuable pieces?
Yeah, they might, but Cisco has a way of snatching strategic defeat out of acquisition victory. You can corner the opportunity for houses by getting prefab walls, roof, furniture, and so forth, but if you forget to tell anyone you’re building a house you risk generating more yawns than dollars. Worse, the absence of a strong position for the pieces of Cisco’s winning design will give competitors an opportunity to step in with their own moves. Every day that Cisco doesn’t sing risks a competitor stacking the market choir’s sheet music to their own advantage. And competitors are out there.
Alcatel-Lucent has arguably the most complete and mature content strategy, but it’s been a bit hung up on IPTV and hasn’t advanced its positioning to cover more recent trends as quickly as it should have. They also have the best technology for a “service layer” but they’ve never been able to get the message out. Ericsson has made radical advances in their cloud networking positioning, taking them from a non-player status to being a contender, and they obviously have strong mobile credentials. They have, in fact, pretty much all of the key technology for mobile and the cloud. NSN has a CDN relationship with Verivue and a well-positioned multi-screen mobile video strategy, not to mention their strong mobile RAN position. Any of these three could make life more difficult for Cisco as it tries to capitalize on its new technology.
Juniper may be the player with the most to lose here, simply because the other players in the market space keep starting new races and Juniper has the smallest number of runners. The IP and Ethernet switch layer is a tough place to jump off into a service story from. As a mobile player, Juniper lacks the same things Cisco lacks. In the cloud space, Juniper has switches but no servers, so Cisco’s strategy for making exciting linkages between the two is hurting, and Juniper hasn’t played “cloud networking” nearly as well as Ericsson has. Now it’s pressured in content, where its own positioning has been anemic.
But will this Cisco move generate counter-moves at all? That’s the question I can’t answer, because I don’t know whether Cisco’s acquisition is aimed at building a strategy or just managing sales-generated objections on product coverage. How many times have we seen Chambers run out and buy a company because a sales person said they needed a feature to close a deal? How many of those companies have turned out to be albatrosses?