M&A arms race

Following a slew of acquisitions from Cisco Systems and Motorola in recent months, the acquisition of Tandberg Television proposed this week by Arris would set up a three-way race for the residential triple-play equipment market.

Acquisitions have become the ammunition in the growing arms race among megavendors to lock in their positions in this highly prized space.

Cisco is hoping to increasingly take advantage of its growing identity as an end-to-end video provider by ratcheting up integration of products across its portfolio, from the in-home networking gear it acquired from Linksys and Scientific-Atlanta to its own routers (Cisco is adding video caching appliances to its 7600 routers this quarter and integrating them eventually).

Unlike Cisco, Motorola adds to its video business an access equipment business, having sold its gigabit passive optical networking (GPON) gear to Verizon Communications. Cisco could counter that by acquiring GPON vendor Calix, whose chief executive has sold out to Cisco before and whose newest director is a 10-year Cisco vet. (Or maybe Zhone Technologies?)

In any case, the two vendors are filling out their already vast portfolios so quickly it becomes harder to define them every week. Motorola has its hand in everything from handsets to video-on-demand software. Cisco, in addition to being a powerhouse in the enterprise space, sells everything from optical gear to set-top boxes. It’s hard to give them a more descriptive label than “equipment vendors” at this point, and even that doesn’t tell the whole tale.

After the telecom bubble burst, we heard plenty of vendors recount the lessons they learned about the hazards of trying to be too many things to too many customers. These days, however, vendors seem to feel they have no choice but to try.

E-mail me at egubbins@prismb2b.com.