Cisco buys set-top box arm of DVN, plans Chinese market assault

Stuart Corner
Tuesday, 03 November 2009 06:25

IT Industry - Deals

Cisco has announced plans to pay $US44.5m in cash for the set-top box business of DVN Holdings saying the move will further its vision for the global connected home. In particular it is eyeing a massive Chinese market for digital set-top boxes.

DVN Holdings claims to offer a complete end-to-end solution from head-end to user equipment to enable a service provider to run a digital broadcast business and to have already installed systems in more than 20 municipalities and provinces in China. (Its customers appear to be exclusively in China). The company claims to generate revenues from the sale of set-top boxes, broadcasting platforms, subscription fees and other services such as online games.

Cisco has also entered into a go-to-market alliance with the remainder of the DVN organisation in order to use the company's middleware and applications and its integration and support services. It claims that "The alliance will provide joint customers with unparalleled end-to-end capabilities through the evolution from basic digital broadcast to advanced interactive services.

Of the $US44m purchase price, approximately $US17.5m will be paid up front and up to $US27m over four years based on the achievement of specific sales milestones.

Cisco has not explained in detail why it has opted for one portion of DVN's technology, which appears to be an integral component of the end-to-end offering. Cisco vice president of corporate development, Hilton Romanskk, said:" If you look at the primary drivers for the deal we look at video as something we have talked a lot about, [and so is] globalisation. Our ability to address this market in this country is critical for our growth and at the same time [we are] trying to drive the network as a market for our solutions...We think it is going to be a big one for Cisco."

Ken Klaer, vice president and general manager of Cisco's International Cable business unit said: "With this acquisition, we will offer customers the powerful combination of DVN's products with the Cisco IP next-generation network platform, and Cisco will be well positioned to engage in the largest digital transformation opportunity in the world today [China]."

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