Networking
equipment market leader Cisco Systems on Tuesday said it plans to acquire
wireless spectrum management startup Cognio for an undisclosed sum.
The
acquisition of the seven-year-old, Germantown, Maryland-based Cognio steps up
the pressure on Cisco’s smaller rivals
in the still-emerging corporate wireless local area network market.
Cognio,
a Cisco partner, markets products that detect and manage local-area radio
frequency interference that can degrade or completely interrupt network
communications. The startup has taken more than $20 million in
funding from Northbridge Venture Partners, ABS Ventures, and Avansis Venture.
“The
corporate wireless market is finally finding some traction and Cognio decides
to sell, so Cisco must have made them a pretty good offer,” said William
Lesieur, an analyst with Technology Business Research.
San
Jose, California-based Cisco has bought three corporate wireless LAN firms in
the past eight years at a cost of almost $1.3 billion.
Cisco
acquired Aironet Wireless, which made wireless networking products, for $800
million in stock in 1999. The networking giant also acquired wireless gear
maker Airespace for $450 million in 2005, and wireless security software firm Meetinghouse
Data Communications for $43.7 million in July 2006.
A
heavily-invested but so far disappointing sector, the corporate wireless market
is attractive again because of the emergence of a new WiFi standard and the
growing demand for voice over WiFi services.
The new 802.11n standard promises
more bandwidth, better security, and improved reliability, all issues that have
so far slowed WiFi adoption among businesses. But the 802.11n standard, while
attractive, is still incomplete after at least two years in development.
“As
these wireless networks become more complex and include voice and location
based services, they will require lifecycle care and some of these acquisitions
are timed to coincide with that kind of demand,” said Chris Silva an analyst
with Forrester Research.
The
wireless LAN market includes a number of smaller firms such as Aruba Networks,
which went public in March, Trapeze Networks, Meru Networks, and Colubris
Networks.
“If
Cisco sells Cognio’s products as a service it will have significant impact on
its competitors and their partners because many depend on that kind of
lifecycle management for continuing revenue,” said Mr. Lesieur.
“As
hardware products commoditize, service is where you make your money so the
competition will have to respond,” he said.
A
Cisco spokesman said the company plans to sell Cognio’s software as products
initially but will sell them as integrated services ultimately.