Cisco goes after mobile infrastructure market with $US2.9b Starent purchase

Stuart Corner
Wednesday, 14 October 2009 03:03

IT Industry - Strategy

Cisco has signalled its intent to be a major player in the market for network infrastructure underpinning the burgeoning smartphone and mobile data ecosystem with a $US2.9 billion cash offer for Starent Networks, a leading supplier of IP-based infrastructure products for mobile and converged carriers.

Announcing the deal Cisco said: "The Mobile Internet is at an inflection point as IP-enabled smartphones and other connected mobile devices gain rapid acceptance. Service providers have been actively investing in this market as global mobile data traffic is expected to more than double every year through 2013, according to the Cisco Visual Networking Index."

Starent Networks claims to provide the multimedia intelligence, core network functions and services to manage access from any 2.5G, 3G, and 4G radio network to a mobile operator's packet core network. The company's access-independent technology is deployed in CDMA2000 (1X, EV-DO), UMTS/HSPA and WiMax networks.

Cisco CEO, John Chambers, said: "We believe [Starent's] products and engineering talent will greatly benefit our service provider customers as they build out their mobile Internet offerings."

Pankaj Patel, senior vice president/general manager of Cisco's service provider business, added: "Cisco and Starent Networks share a common vision and bring complementary technologies designed to accelerate the transition to the mobile Internet, where the network is the platform for service providers to launch, deliver and monetise the next generation of mobile multimedia applications and services."

On completion of the transaction, Starent Networks will become a new Mobile Internet Technology Group within Cisco's Service Provider Business. It will be led by Starent Networks' president and CEO, Ashraf Dahod.

Starent Networks was founded in 2000 and completed its IPO in 2007. It has approximately 1,000 employees worldwide and in Calendar 2008 reported revenue of $US254.1 million, up 74 percent from the prior year. The company has more than 100 customer deployments in 45 countries worldwide

Commenting on the deal on a Cisco blog, Simon Aspinall, senior director, service provider marketing at Cisco, said: "The growth in the Mobile Internet presents enormous opportunities and a few challenges for service providers...We expect global mobile data traffic to more than double every year through 2013, with a 66-fold increase in mobile data traffic between 2008-2013. Service providers need a completely new approach to deliver these new services and build efficient mobile networks for this enormous growth in traffic.

"The Mobile Internet uses a rich tapestry of radio access technologies from 3G to 4G...For service providers to efficiently offer new services and to intelligently deliver the underlying traffic requires a single integrated architecture. Cisco believes that the underlying IP-based network is the platform that binds these different services and technologies together. Combining Cisco's IP and video strength with Starent Networks' leading mobile infrastructure technologies creates a portfolio of solutions that address the needs of our service provider customers to offer rich, high-quality multimedia experiences to mobile subscribers on 3G and 4G radio networks, and make a smooth transition to become experience providers."