Cisco to acquire CoreOptics for $99 Million

Bangalore: Cisco has announced to acquire CoreOptics for optical networking applications for $99 million in cash. Cisco had disclosed earlier about the acquisition of a consumer product design and development consultancy, Moto Development Group for an undisclosed amount, reports Jim Diffy from Network World.

Cisco says CoreOptics will provide "highly advanced" 100Gbps transmission technology to service providers for supporting IP-based video, mobility and cloud services and CoreOptics will bring to Cisco expertise in digital ASIC design, advanced modulation formats, as well as optical systems, applications and network architecture.

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Cisco says, the next phase of optical networking innovation will be complicated modulation formats as they believe global IP traffic will increase from 2008 to 2013 with a 40 percent compound annual growth rate. Advanced DSP technologies will enable efficient transmission of large amounts of data over existing fibre optics. This will accommodate growth in network traffic over existing infrastructure and allow the service providers to manage capital infrastructures.

Majority of CoreOptics employees are in Nuremberg and Gerlingen, Germany, even if it is based in San Jose. After the acquisition, CoreOptics employees will be a part of the Cisco Service Provider Technology Group and they will work with Cisco's existing optical engineering teams in Monza, Italy; Bangalore, India; and Richardson, Texas.

In 1999, the company paid $7.4 billion for Cerent, a maker of metropolitan networking transmission gear, and Monterey Networks, a maker of optical switches. Cisco killed the Monterey product in 2001 and has steadily lost share and expertise in optical multiservice SONET/SDH provisioning platforms (MSPP), a $6 billion market where the Cerent platform competes.

Cisco also acquired Pirelli Systems in 1999 for long haul and extended long haul dense wavelength division multiplexing transport. The ONS 15808 was discontinued in 2005.

Cisco was ranked tenth in the MSPP market in 2009, when it intended to acquire and capture a market in transition and attain first and second share position, according to Dell'Oro Group. However, Dell'Oro notes that in the first quarter, Cisco's optical revenues increased 15 percent year by year, making it the sixth biggest vendor by revenue share. And in the WDM Metro market space, where the 15454 also plays, Dell'Oro estimates Cisco was the No. 3 vendor on a revenue share basis. According to Infonetics Research, Cisco and Fujitsu posted large first quarter market share gains in the packet-optical market segment, presumably the area the CoreOptics technology will address.