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Cisco's Starent Buy: $2.9B Well Spent

10/26/09 — Analysts were generally high on Cisco Systems Inc.'s $2.9 billion acquisition of mobile packet core specialist Starent Networks, which they say gives Cisco instant credibility in the market for Evolved Packet Core (EPC) switching software.

So says Gartner Inc., anyway. The market watcher predicts that Starent and its EPC special sauce will be a boon to Cisco's 7600 Series platform.

"Cisco is betting on the strong trends for mobile data," write analysts Akshay Sharma, Frank Marsala and Juan Fernandez in a Gartner research blast. The three cite Cisco's own estimates that global mobile data traffic will double every year between now and 2013.

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Sharma, Marsala and Fernandez contrast Starent's EPC technology -- which they deem "excellent" -- with Cisco's incomplete EPC offering. "Cisco's EPC is not a complete solution, as it is based on the 7600 router as the platform for the public data network...and serving gateways," they point out. "The Starent technology will extend Cisco's core routing business, enabling it to offer an end-to-end solution in the core, which enhances its competitiveness against Alcatel-Lucent, Ericsson, Nokia-Siemens, Juniper Networks and Huawei. Such solutions appeal to accounts like AT&T that prefer working with larger vendors with comprehensive offerings."

Starent also brings demonstrable credibility in the code-division-multiple-access (CDMA) segment, thanks to its packet data serving node (PDSN) offerings.

The Gartner trio says Cisco should be able to exploit Starent's other offerings, too, including its IP Multimedia Subsystem (IMS), Call Session Control Function (CSCF), ASN gateways for Wi-Max, PDSN/Gateway GPRS Support Node (GGSN) and long-term evolution (LTE) EPC assets.

"Eventually, Cisco could port these solutions on top of the Cisco ASR 9000," Sharma, Marsala, and Fernandez suggest.

There's additional upside here for Cisco, too: Its presence could help convert Verizon Wireless and Sprint -- which are currently trialing Starent's technology -- into paying customers.

"The acquisition would also give Starent an entry into Cisco's customer base and its status as a preferred vendor on many Tier 1 accounts," they point out.

In the near-term, Sharma, Marsala, and Fernandez conclude, the acquisition should certainly shore up Cisco's aging 7600 Series. "[Customers should] shortlist Cisco for upgrades and replacements of Cisco's 7600-based products if you are able to leverage an installed Cisco infrastructure." the write, stressing that new Starent customers, particularly those that don't have Cisco investments, should "factor in the risk if the deal does not go through." --Stephen Swoyer

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