Cisco is buying cable TV set-top box maker Scientific-Atlanta in the second-largest purchase in Cisco's history.
This move is likely to give Cisco more reach in the home entertainment market. The deal, which still needs shareholder and government approval, is worth $5.3 billion, and may spark problems for Microsoft, which partners with Cisco rival Alcatel in the television-over-IP business.
Cisco senior vice president of routing and service provider technology Mike Volpi will overseee the acquisition, and sees it as a way to disrupt Microsoft's space: "Now we offer a better end-to-end platform for video rather than just the pure play in routers like we were before. That means Microsoft is probably more inclined to work with us," he told Fortune Magazine.
He also suggested his company would willingly work with companies other than Microsoft. "When you do video-on-demand somebody needs to create the user interface," he said. "If Microsoft chooses not to partner with us, my sense is that many others would like to do that, like either Yahoo or Google."
Volpi also sees the set-top cable box becoming a hub for other devices. Cisco will "eventually" incorporate wireless home networking features into its set-top box.
However, the deal isn't sealed yet. Two lawsuits were launched in protest at the deal yesterday. These accuse Scientific-Atlanta and its directors of breaching their duties to shareholders in accepting an "inadequate price" for the sale. These claims are "without merit", the company countered.