Cisco gets wise to wireless networking

Through a collection of acquisitions and alliances, the giant networking company has assembled an array of technology this year it hopes can fill the holes in its bread-and-butter network switches and routing device lineup.

The implications of Cisco's entry into various wireless markets, from broadband technology to Internet data systems, are clear: Customer demand has forced the company to act just as the technology seems to have overcome many of the pitfalls that have stalled its development in the past. True to form, Cisco has acted through a combination of acquisitions, partnerships and market-savvy moves.

Cisco plans to detail its ambitions for the "fixed" wireless market later today as part of an annual update for the financial and industry analyst community. The nascent technology, comprised of pizza-sized dishes that can transmit data at a high rate in congested areas, has provoked increased interest from Cisco. It plans to share its technology with third parties to spur the market forward.

Companies such as Cisco, along with competitors like Nortel Networks, Lucent Technologies, Nokia and Ericsson, among others, are salivating at various wireless opportunities. They're all finding that the number of people who want to be connected to a private network or the Internet outstrips the reach of current land-based networking technologies, such as cable, digitized copper phone lines or private connections run over a backbone network.

In Cisco's case, wireless technology is just another option in a strategy to provide "soup to nuts" networks for its corporate, Internet service provider (ISP) and telecommunications carrier customers.

"Wireless is a market we know we have to play in and we're moving forward with that," said John Shantz, vice president of market development at Cisco and acting general manager of the company's fixed/mobile wireless unit.

"For Cisco, if they see there's a sudden demand for a technology, they have to make a move," said John Armstrong of market researcher Dataquest.

Cisco has filled holes in its strategy through a variety of means. Earlier this year, the company announced a broad alliance with Motorola to develop a series of Net-based technologies for wireless phones and other untethered devices. That work continues, with a proposed set of technology specifications in the hands of a select few Cisco customers, according to executives.

The companies pledged to invest up to $1 billion to develop a new set of Net-based wireless technologies. As part of the effort, Cisco and Motorola will open a regional integration center later today in London so that customers can be trained on the potential for the new wireless tools. Others are planned for Dallas, San Jose, Calif., and Tokyo.

Cisco's work with Motorola does not stop with traditional cellular wireless systems, however. In June, Cisco and Motorola announced the purchase of Bosch Telecom's broadband fixed wireless assets. Through that deal, a new firm, SpectraPoint Wireless, was formed.

"Our view is that broadband as a competitive access play is going to be a very large market worldwide," said Shantz. "Our relationship with Motorola is positive and continues to broaden. [The market] is developing at a pace that's a little slower than developing products for the Internet."

The 1998 acquisition of Clarity Wireless formed the basis for the company's effort this October to spur adoption of fixed wireless technology through a new standard. The company enlisted third parties such as Motorola, Texas Instruments and KPMG, among others, to build components or provide services based on the technology.

This marks Cisco's most ambitious bid to take a previously esoteric technology and try to feed to it to a broader audience of network equipment customers. Though fixed wireless systems have not made a dent of any significance in data networking, Internet growth and a thirst for connections have brought formerly discounted options back to the fore.

"The technology is now absolutely proven to work," said Greg Raleigh, director of wireless engineering at Cisco. "That's why we think we can really drive this forward."

Aironet Wireless Communications, a provider of wireless equipment for departmental local networks, or LANs, was plucked by Cisco last month for $800 million, capping the company's wireless moves for the year.

As shown by Cisco's patchwork entry into the wireless business, the technology will primarily be used to give the company the means to build a more versatile network for its customer base.

"The wireless data market is still a niche market," said Dataquest's Armstrong. "When it comes to niche technology, Cisco is not a leader--it's a follower.

"They certainly don't want to be in a position where they have a gap in their product portfolio," he said. "That's not their style."