After two years of saving its pennies and keeping its money in the bank for a rainy day, networking outfit Cisco has splashed out and bought NDS, which develops pay TV software, for $5 billion.
Cisco told Reuters that NDS was a strategic fit for its video system Videoscape, as NDS' software allows cable and satellite TV companies to deliver encrypted signals through tellies. NDS technology is used by BSkyB, Sky Italia in Europe, Cablevision Systems, Comcast and Rogers in North America.
NDS is 51 percent owned by private equity fund Permira and 49 percent by News. Cisco wants to find new networking functions and with the world+dog wanted to get into the TV business, the outfit thinks it is on to a nice little earner.
Chief Executive John Chambers said Cisco first began looking at NDS about a year ago and now it is betting heavily on video. Chambers likes to call "the new voice" although it has been around since the 1940s and is one of Cisco's “five growth pillars” which you can take with a pillar of Salt.
Chambers said that video would pervasive, on every device. NDS' flagship product, VideoGuard, which is installed on home TVs via smartcards works with Cisco's video offerings because it allows television operators to extend their pay-TV services to other media devices.