Cisco Enters Market for IP-based Mobile Infrastructure via Acquisition of Starent Networks

For Cisco, the acquisition extends its bet that consumers and workers will
keeping pulling down ever larger amounts of data onto smartphones and laptops
over wireless networks.   Starent?s hardware and software products
make it possible to create and manage high-speed data services, and the company
counts carriers like Verizon Wireless, Sprint Nextel, Vodafone Group and China
Telecom as customers.

?We have had a huge explosion in data traffic,? said Ned Hooper, Cisco?s chief
strategy officer.   ?We expect the market for mobile data to double
every year through 2013.?

In a most revealing blog on his company’s web site, Simon Aspinall, Senior
Director of Service Provider Marketing provides motivation for Cisco’s
acquisition of Starent Networks.   WIth its purchase of Starent, Cisco
will enable the sending of IP content wirelessly via carrier networks.

"The next step in the evolution of the Internet is to make it available anywhere
and at any time, which requires the convergence of the mobile world and
Internet.   The ?Mobile Internet? will offer the services and
applications from the Internet on-the-move, and on any device.   This
market is growing rapidly, with IP-enabled Smartphones like the iPhone and
Blackberry, low-cost netbooks, games handsets, digital cameras and other
consumer electronics, mobile connected devices are becoming a part of everyday
life for millions of people around the world." he says.

Cisco has predicted that almost 64% of the world?s mobile data traffic will be
video by 2013, according to the

Cisco Visual Networking Index.

Aspinall added, "As a fast-growing provider of multimedia solutions designed to
enable mobile operators to deliver Mobile Internet to their subscribers, Starent
Networks is a key player in the Mobile Internet transformation.   The
company has more than 100 customer deployments in 45 countries worldwide, with
many of the world?s most prominent and innovative mobile operators.  
We believe that, together, Cisco and Starent Networks bring complementary
solutions designed to help accelerate the transition to the rapidly growing
Mobile Internet.   We believe the Mobile Internet is a huge transition
that is happening very quickly, and we believe this is the right time for Cisco
and Starent Networks to combine their strengths to enable operators to launch,
deliver and profit from the next wave of mobile multimedia applications and
services."

Cisco CEO John Chambers "believes in video, and points to how the early use of
the Internet in business systems resulted in faster economic growth in regions
where it was used," according to Peter Christy, an analyst at Internet Research
Group.   "Now that phenomenon has slowed down, Chambers is interested
in networking that facilitates human collaboration."

Starent?s main customer is Verizon Wireless, which accounted for about 70
percent of sales in the second quarter.   Other customers include
Vodafone Group Plc and Sprint Nextel Corp., according to Starent?s Web site.  
?Starent?s efforts to diversify away from Verizon may have been an uphill
battle,? Anil Doradla, an analyst at William Blair & Co.   in Chicago,
said today in a note to investors.   ?With Cisco?s backing, we believe
the company is better positioned to compete for business with Tier-1 mobile
operators outside Verizon.?

Yankee Group analyst Zeus Kerravala noted that while Starent makes carrier
equipment for a range of wireless protocols, including high-speed WiMax
technology, it also makes gear for LTE, the leading competitor to WiMax.  
Kerravala said Cisco’s interest in Starent is primarily the LTE component, which
gives Cisco the ability to broaden its product mix, much as competitors Nokia,
Alcatel-Lucent and Huawei Technologies have done.

Opinion:

We believe that the Starent acquisition is to position Cisco to compete in
mobile Internet infrastructure-initially with 3G protocols and later with LTE.  
We wonder if there is any mobile WiMAX in Cisco’s bag of tricks? Yes, we know
that Cisco is the "Core IP NGN" vendor to Clearwire and several WiMAX providers,
but that has nothing to do with the mobility portion of the WiMAX networks.