Cisco ‘Homes’ in on Entertainment

In a bid to expand its home networking product line, Cisco Systems announced today that it will pay $61 million in cash and stock
for Denmark-based KiSS Technology.

The San Jose, Calif., equipment vendor said KiSS’ platform, which is used in
DVD players and recorders, provides access to content on the Internet or
other devices in a home network.

The technology will help Cisco’s Linksys division develop an entertainment
suite for its consumer and small-business customers.

“KiSS has emerged as a leader in networked video and audio products in
Europe and we hope to use that expertise to expand worldwide,” Charlie
Giancarlo, president of Cisco-Linksys, said in a statement.

Cisco, citing research from In-Stat, said the purchase takes advantage of an
industry trend.

According to the IT research firm, the networked entertainment market is
expected to grow from $3.9 billion in revenue at the end of 2004 to $16.1
billion by 2009. In addition, In-Stat estimates that networked entertainment
devices will be in more than 38 percent of home networks by 2009.

KiSS, which stands for Keep it Simple Solutions, was founded in 1994 and is
privately held.

Cisco will continue to support KiSS products and the KiSS brand will stand
for now, Elizabeth McNichols, a Cisco spokeswoman, told
internetnews.com.

“Right now, KiSS is only sold in Europe,” said McNichols, who noted that the
network entertainment products have caught on faster in Europe than the
United States. “We’ll continue to monitor the branding.”

The deal is expected to close by the end of October, she said. When it does,
KiSS’ 65 employees will join Cisco’s Linksys division.

Today’s deal is the second buy to augment Linksys. In April, it paid $68 million for consumer Voice over IP
technology provider Sipura Technologies.

More broadly, Cisco said the purchase fits with its acquisition strategy of
picking up companies that will bring new technologies, intellectual
property and speed time-to-market for its products.

Under this approach, Cisco has been buying smaller companies than it did
during the Internet boom of the late 1990s. For example, the company has been snapping up firms in the storage sector over the last year, as well.

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