Flowers in their hair? Don't think so. The Internet giant seems to have a track record of acquisition where organic innovation might have been expected to drive the company forward… 

You can’t be anti-Cisco. Above all others, it has a claim to have facilitated the development of the Internet, rather than any preposterous claim to have invented it. Cisco’s facilitation claim is thus far more credible than those of, say, Redmond’s Rip Van Winkle or the ultimate Internet policy carpet-bagger, Al Gore.

So news that Cisco Systems is to pay upwards of US$5bn for Scientific-Atlanta could be taken as evidence of the growing attractiveness and liquidity of the technology sector, as seen by one of its major actors. Yet one should bear in mind that this would be the same Cisco Systems that helped drive the Internet bubble by using its own shares as inflationary currency in the tech-stock boom.

Having been founded in 1984 (by a group of folk from Stanford University, it goes without saying), Cisco launched on a spree of big-ticket (and often not so big-ticket) acquisitions. It’s a criticism often levelled at Cisco that it makes up for its lack of expertise by buying in the expertise of others.

This seems really unfair. Until you consider the evidence.

In chronological order, the 1993-2004 acquisitions by the cuddly folk at Cisco included: Crescendo, Newport Systems Solutions, Kalpana, Lightstream, Combinet, Internet Junction, Grand Junction, Network Translation, TGV Software, Stratacom, MICA Technologies, Nashoba Networks (remember them?), Granite Systems, Netsys Technologies, Metaplex, Telestone, Skystone Systems, Global Internet Software Group, Ardent, Dagaz, Lightspeed International, Wheelgroup Corp, Netspeed, Precept Software, CLASS Data Systems, Summa Four, American Internet Corp, Clarity Wireless Corp, Selsius Systems, Pipelinks, Sentient Networks, Fibex Systems, Geotel Communications, Amteva Technologies, TransMedia Communications, Stratum One, Calista, MaxComm Technologies, Cerent, Monterey Networks, CoCom AS, WebLine Communications, Tasmania Network Systems, Aironet Wireless Comunications, V-Bits, Worldwide Data Systems, Internet Engineering Group, Pirelli Optical Systems, Altiga Networks, Compatible Systems, Growth Networks, Atlantech Technologies, InfoGear Technology, JetCell, SightPath, Pentacom, Seagull Semiconductor, Arrowpoint Communications, Qeyton Systems, HyNex, Netiverse, Komodo Technology, NuSpeed Internet Systems, IP Mobile, PixStream, Vovida Networks, IPCell Technologies, CAIDS Software Solutions, Active Voice, Radiata, Exio, AuroraNetics, Allegro Systems, Hammerhead Networks, Navarro Networks, AYR Network, Andiamo Systems, Psionic Software, Okena, SignalWorks, Linksys Group, Latitude Communications, Twingo Systems, Riverhead Networks, Procket Network, Actona Technologies, Parc Technologies, P-Cube, NetSolve, dynamicsoft, Perfigo, Jahi Network, BCN Systems.

That’s an impressive list of tyros, turnarounds and turkeys involved in the information economy, all kissed by the Cisco dollar. 

And now, of course, as of 18 November 2005, we can provisionally add Scientific-Atlanta to the list (click here). We’ll need to wait almost a year to see whether the deal goes through. But it is likely to go through and it is undoubtedly an act of hegemony.

Carve open Cisco  and you will find ‘if you can’t beat them buy them’ strip-written through its corporate heart. In the triangular structure of corporate, customer and employee welfare it is pretty certain that Shareholders sit at the apex. This might just ignore the fact that shareholders were the first to be bruised by the 2000-1 collapse of Cisco. Chambers, as the engineer of that collapse, may be trying to make amends. God only knows why he is still there.

See no evil
There are several perspectives that one can take when looking at dealings like these.

The first, to which we shall return, is that 1993 marked both the start of the serial acquisition spree and the appointment of John Chambers as CEO. Coincidence, perhaps. Chambers is still at the helm, which speaks of longevity but not much else.

The second, and most charitable, is that Cisco has somehow acted as an incubator for new technologies related to its core routing business. That interpretation borders on the apostolic. Blessed be those upon whom Cisco bestows its favours.

The third, less charitable, is that Cisco fails to innovate and is therefore obliged to buy in innovation from smaller companies. It is buffering its inadequacies by buying in competence.

Against this backdrop, John Chambers remains able to report, with what seems like a straight face, that the Scientific-Atlantic deal “further extends Cisco's commitment to and leadership in the service provider market.”

Presumably the same was said of Crescendo, Newport Systems Solutions, Kalpana, Lightstream, Combinet, Internet Junction, Grand Junction, Network Translation, TGV Software, Stratacom, MICA Technologies, Nashoba Networks (remember them?), Granite Systems, Netsys Technologies, Metaplex, Telestone, Skystone Systems, Global Internet Software Group, Ardent, Dagaz, Lightspeed International, Wheelgroup Corp, Netspeed, Precept Software, CLASS Data Systems, Summa Four, American Internet Corp, Clarity Wireless Corp, Selsius Systems, Pipelinks, Sentient Networks, Fibex Systems, Geotel Communications, Amteva Technologies, TransMedia Communications, Stratum One, Calista, MaxComm Technologies, Cerent, Monterey Networks, CoCom AS, WebLine Communications, Tasmania Network Systems, Aironet Wireless Comunications, V-Bits, Worldwide Data Systems, Internet Engineering Group, Pirelli Oprical Systems, Altiga Networks, Compatible Systems, Growth Networks, Atlantech Technologies, InfoGear Technology, JetCell, SightPath, Pentacom, Seagull Semiconductor, Arrowpoint Communications, Qeyton Systems, HyNex, Netiverse, Komodo Technology, NuSpeed Internet Systems, IP Mobile, PixStream, Vovida Networks, IPCell Technologies, CAIDS Software Solutions, Active Voice, Radiata, Exio, AuroraNetics, Allegro Systems, Hammerhead Networks, Navarro Networks, AYR Network, Andiamo Systems, Psionic Software, Okena, SignalWorks, Linksys Group, Latitude Communications, Twingo Systems, Riverhead Networks, Procket Network, Actona Technologies, Parc Technologies, P-Cube, NetSolve, dynamicsoft, Perfigo, Jahi Network, BCN Systems.

I don’t mind repeating the roll-call as it took so much of my free time to compose it from Cisco’s sources. And it cost billions of Cisco dollars to acquire it.

I’d love to know how and why it worked out like that. And whether the collapse of Cisco’s market cap might have been averted had it bought yet more plankton in the rarefied ocean in which it swims as the biggest fish of all.
Jim Chalmers