Cisco to acquire Arroyo Video
San Jose Mercury News
By Michelle Quinn
August 22, 2006
All that content is stored on a server somewhere, and it's available to me when I want to get it. Cisco Systems, which sees a future in being a provider of all the equipment used for video on demand, continued its buying spree Monday with an announcement that it will purchase Arroyo Video Solution, a Pleasanton firm that makes software that allows video servers to connect, for $92 million.
The acquisition of Arroyo marks a continued shift in Cisco's strategy to become a key player in a growing market in which digital movies, music, television and telephone services run over networks, and can be watched on several devices at any time.
Initially, Arroyo's technology will improve viewers' experience of watching what is known as time-shifted television on cable set-top boxes, said Paul Bosco, Cisco's vice president of cable and video initiatives. With Arroyo, the consumer will eventually have a networked digital video recorder, allowing a person to watch anything at any time. The technology also allows advertisers to insert advertising that can be targeted to the viewer's demographics.
Ultimately, with Arroyo, which already counts cable companies as customers, Cisco takes a step closer to being able to offer several kinds of media -- television programming, streaming video and music -- on any device people want, he said.
Cisco, the San Jose networking giant that makes the technology that sends data over the Internet, is 'trying to bring the best of the Web to the TV, and bringing the richness of the television to the Internet,' Bosco said.
Arroyo's technology will allow people to eventually pull up any content, even last week's news, on their television sets and personal computers, said Michael Howard, principal analyst and co-founder of Infonetics Research, a market research firm. 'All that content is stored on a server somewhere, and it's available to me when I want to get it.'
In some ways, Cisco's purchase can be viewed as a defensive move, snapping up Arroyo before one of its competitors or customers could buy it, Howard said.
Eve Griliches, research manager at IDC, a market research firm, sees Cisco's purchase as a smart move. 'What Cisco is doing is not wasting any time to make sure that the path to the set-top box in the consumer home will be pulled together by them,' she said.
The advantage of Arroyo's technology, said Griliches, is that it will allow all video servers to back up one another. 'You can use one server for storage. If one server goes down, the other server can take over, which is really huge.'
The deal for Arroyo, a privately held company, is the latest in a string of acquisitions in the past year that indicates Cisco, the leading network-gear maker, sees delivering video as its biggest challenge and opportunity.
In November, Cisco announced its $6.9 billion purchase of Scientific Atlanta, the set-top box manufacturer. In June, Cisco announced it was investing in Akimbo, a San Mateo start-up that delivers video to home TVs via a set-top box. Cisco has also invested in two content companies, CinemaNow and MovieBeam.
With Arroyo, which has 44 employees in Pleasanton and Utah, Cisco will get the benefits of working with Drew Major, an original founder of Novell and Paul Sherer, former chief technology officer at 3Com.
Copyright © 2006 San Jose Mercury News, All Rights Reserved.
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