Cisco to Spend $3 Bln on Videoconferencing Company Tandberg

By Geoff Duncan October 1, 2009

Cisco is already a giant name in Internet infrastructure, making a substantial amount of the routers and gear that keeps the buts flowing within and between networks, but the company is also transforming itself into a major player in digital video with offerings ranging from the very high-end TelePresence video conferencing solution, the business-oriented WebEx service, and even consumer video hardware like the Flip digital camcorders acquired via Pure Digital. Now Cisco is buying another video conferencing player by announcing a deal to acquire Norway’s Tandberg for some $3 billion in cash.

“Cisco and Tandberg have remarkably similar cultures and a shared vision to change the way the world works through collaboration and video communications technologies,” said Cisco chairman and CEO John Chambers, in a statement. “Collaboration is a $34 billion market and is growing rapidly—enabled by networked Web 2.0 technologies. This acquisition showcases Cisco’s financial strength and ability to quickly capture key market transitions for growth.”

Tandberg‘s video conferencing solutions fill a gap in Cisco’s video communications product offerings between its high-end TelePresence suites and its WebEx services aimed primarily at businesses; unlike Cisco’s product offerings, Tandberg’s systems can connect to video conferencing solutions from the likes of Microsoft and Polycom, making them more flexible investments for businesses. Cisco looks to digital video solution in part as a way to boost demand for its high-bandwidth network management gear. Real time digital video is one of the most data- and bandwidth-intensive applications on the Internet; if Cisco can boost business and enterprise use of video conferencing solutions, the company stands to sell more of its infrastructure gear.

If approved by shareholders, the acquisition would be Cisco’s biggest takeover deal since the company acquired WebEx back in 2007. Cisco expects the deal will close in early 2010; Tandberg’s CEO Fredrik Halvorsen will stay on to head up the new unit.

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