Will Cisco Buy Tivo? (CSCO, TIVO)

Includes: CSCO, TIVO
by: The Stalwart

The Stalwart submits: Now that Cisco has made it clear that their strategy is to target the consumer market, both explicitly, and implicitly (with a $6.9 billion buyout of Scientific-Atlanta), the question naturally turns to, who will Cisco buy out next? After all, this is Cisco we're talking about, a company whose only core competency, arguably, is integrating other companies into it. If the networking market ever disappears, they could certainly start a consulting firm advising other companies in this area.

Marguerite Reardon from CNET speculates that Tivo may be the next target:

According to a source familiar with Cisco and TiVo, there's a "potential for an interesting partnership" to emerge between the two companies. TiVo, the source said, has held discussions with many potential partners.

There's no indication that Cisco is looking to buy TiVo, and details regarding a potential partnership are scant. But Cisco's recent acquisitions do suggest how serious the company is about becoming a major presence in the living room, and TiVo carries weight as a well-known consumer DVR brand. At the same time, Cisco could help TiVo regain the distribution clout it lost when satellite TV provider DirecTV said it was walking away from a longtime partnership with TiVo.

Representatives from both Cisco and TiVo said they would not comment on rumors.

It's difficult to see, from our perspective, how greater value is created by melding Linksys, Scientific-Atlanta and Tivo, than if these three remained standalone brands. Unlike in their networking glory days, when Cisco could buy up a small upstart, simply for a piece of a technology (like some revolutionary optical switch), and then scale it up to sell it as part of their package, these kind of consumer electronics products can't easily be scaled up.

Furthermore, having the Cisco backing does relatively little for these companies with well established brands. Most importantly, consumer electronics is hot hot hot right now. Slingmedia, mentioned in the article, just closed a round for $46 million in venture capital funding. Why should we assume that by entering a hot market, that everybody knows is hot, that is very well capitalized, Cisco can find a way to break out? We agree with this author however, that knowing this company, they will certainly try.

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