Cisco has agreed to pay a handsome $330 million for Navini Networks, getting its hands on Navini’s IEEE 802.16e-2005 wireless broadband technology, more colloquially termed mobile WiMAX and a technology that Cisco had said in the past it wasn’t really interested in.
The acquisition price is better than twice the $160 million that venture capitalists are said to have plowed into Navini, most recently a $50 million round just this past May. The list of investors in Navini is long, and includes both Intel and Motorola. Interestingly, it now looks like Cisco will be competing against Motorola in the 802.16e market.
Cisco had been rumored more than a month ago to have been looking at Navini, as well as other potential WiMAX players. Those rumors also told of a healthy debate inside of Cisco as to whether or not the company should get into the 802.16e-2005 market, with a strong faction that apparently has been overruled arguing the market isn’t going to be as big as WiMAX backers insist. Indeed in 2004 the company had indicated it wasn’t interested. Now, according to Tony Bates, senior vice president/general manager of Cisco’s Service Provider Technology Group, that thinking has changed.
“Cisco listens to our customers and observes the market,” said Bates, in a question and answer prepared by Cisco.” Recently, the WiMAX radio systems to deliver broadband wireless have matured, customers are deploying live networks, and overall investment and demand as increased. Therefore, Cisco views this as the proper time to add licensed WiMAX products to our broadband wireless offer.”
Sounding more than a bit defensive about Cisco’s decision to spend a fortune on Navini, Bates added that “While Cisco has not historically sold WiMAX radio systems, we have delivered products and solutions that are part of WiMAX-based broadband wireless systems. These include the Mobile Wireless Home Agent, Cisco Network Registrar, partnerships with several WiMAX radio systems vendors, and the Cisco ServiceMesh architecture which includes WiMAX as a tested backhaul option.”
Bates also confirmed that Cisco had looked at other companies in addition to Navini, saying that “we carefully evaluated a number of possibilities before selecting Navini Networks.” To no surprise he did not identify any of the other companies Cisco had looked at.
What Cisco is getting is a company that has been bragging about its integration of what it calls “Smart Beamforming” technologies with Multi-Input Multi-Output (MIMO) antennas. Navini claims that combination improves the performance and range for WiMAX services and lowers the overall deployment and operational costs for service providers.
The company has already gone to market with the first of what it calls its mobile WiMAX products, although also acknowledging that technically there are no products certified by the WiMAX Forum to use the term mobile WiMAX because such a certification program has not yet started. It has, though, pledged to get its products certified.
Cisco also said that it sees a major potential market for Navini’s products in emerging markets – a segment that is now accounting for what is approaching half of the company’s sales . “Emerging country service providers are in expansion mode, building out broadband wireless networks and are concerned about deployment costs and the availability of skilled resources,” said Brett Galloway, vice president and general manager of Cisco’s Wireless Networking Business Unit, where the company’s Wi-Fi and Wi-Fi Mesh products sit. “Around the world broadband wireless networks based upon WiMAX have the potential to add millions of new Internet users who cannot be reached economically using copper or fiber infrastructures. Additionally, WiMAX networks will help drive the transition to open IP-based broadband wireless architectures and accelerate the rollout of new applications and services.”
Cisco said that once the acquisition closes it plans to integrate Navini into Galloway’s Wireless Networking Business Unit, which is under the Ethernet and Wireless Technology Group.