updatedWhat has the world come to?
Even Cisco Systems, the stately technology giant best known for delivering the boring pipes (or tubes) of the Internet backbone, has fallen for Web 2.0.
The San Jose networking company has just acquired Five Across, a San Francisco company that builds social networks for companies to connect with their customers or fans. The purchase price is undisclosed, but the company only employed 11 people.
Cisco has been hankering to boost its revenue growth and, for some time, to get wider brand recognition from consumers and the excitement generated in the video space, so this isn’t a total surprise. Over the past few years, it purchased living room networking companies, Scientific-Atlanta and Linksys. But we didn’t see the social networking thing coming.
The move is understandable, though. Based on conversations with three or four different Cisco executives in recent months, it is clear Cisco sees social networking and the wider Web 2.0 phenomenon as ways to drive Internet traffic, and thus traffic over their routers and other networking gear — and, it follows, more revenue for Cisco.
Five Across offers the features you expect in a social networking company: Individual profiles, chat, video and photo uploading, RSS and more. Cisco looked at several companies, and settled on Five Across because its technology and management team. Cisco wants technology that can handle large amounts of traffic, because it wants to sell the technology to its big corporate customers (Five Across has already signed up the NHL). Whether consumer electronics companies or large media companies, these customers may use Five Across to identify more closely with their customers. All that communication can be facilitated through technology, benefiting Cisco because it will presumably go over its Internet pipes, said Danielle Levitas, analyst at IDC in San Mateo.
Moreover, Cisco is realizing that many technologies and are first learned by individuals at home before they’re adopted by companies — for example, Skype, for VoIP, or IM for messaging — and so backing Five Across is a way to accelerate the translation of these activities within companies, said Zeus Kerravala of the Yankee Group.
Levitas and Kerravala were both pre-briefed by Cisco about the Five Across purchase.
Five Across raised $2 million way back in 2004 in a first round of venture capital from Granite Ventures and Adobe Ventures. So Cisco wouldn’t have had to pay much for investors to have made a good return.