[April 27, 2005]

Sipura to Beef Up Linksys's VoIP

By David Sims, TMCnet CRM Alert Columnist

When Cisco Systems Inc. bought Kalpana in 1994, it got Charles Giancarlo as part of the deal. In 2003 Cisco bought Linksys Group Inc., in 2003 for $500 million and put Giancarlo in charge.

Last year Cisco named Giancarlo as only the third chief technology officer in the company’s history.

Giancarlo retained his post as president of Cisco-Linksys, which announced yesterday it would buy privately-held Sipura Technology, a maker of consumer products for internet phoning, for $68 million in cash and options.

Clearly Cisco’s betting on VoIP. Only about 1 million U.S. homes currently subscribe to VoIP service, but the Yankee Group expects the number of VoIP customers to top 17 million by 2008.

According to Michael Singer, market research firm Synergy Research Group is also bullish on home VoIP. Their analysts state there are close to eight million home users worldwide using VoIP to make phone calls over their broadband connections. By 2009, Synergy anticipates the number will grow to 58.9 million.

Giancarlo said in a statement: "VoIP is a strategic segment for innovation and growth for Cisco and Linksys. Adding Sipura's technology reinforces our commitment to developing products in the consumer voice space."

It’s the first acquisition for the Linksys division.

Stock analysts The Deal, characterizing the Cisco purchase as targeting small offices, report that Sipura, founded only two years ago and also based in San Jose, makes technology used in VoIP adapters, which plug into a broadband connection to enable Internet calls over a conventional phone.

The company also makes similar gear for home networking routers and Internet gateways and has designed a multiline phone for the consumer and small office and home office, or SOHO, market, Cisco said.

Sipura is one of the youngest companies acquired by normally grabby Cisco in recent years. It has 12 employees and four contractors, a Cisco spokeswoman said. She declined to discuss the startup's revenue or say if it is profitable.

The deal still needs regulatory and shareholder approval, but executives with both companies said they're confident the deal will close by the end of July 2005.

The networking equipment maker said it plans to use Sipura's technology to integrate more voice features into products from its Linksys home-networking division. Linksys provides wireless and networking hardware for the home and home office, as well as small businesses. Cisco entered the consumer market when it bought Linksys.

Cisco has already built some VoIP capabilities into its telephone adapters and wireless home routers, according to Marguerite Reardon. Most of this technology came from Sipura, the company said.

Sipura has been offering Cisco’s Linksys division its analog adapter technology, ATAs, since last year. Traditional analog telephones and fax machines can be connected to the devices to create a phone line over a DSL or broadband Internet connection.

True to Cisco’s business model of aggressive acquisition Sipura is the third company’s Cisco’s purchased this year, along with the $450 million Airespace deal and the $250 million Topspin purchase.

David Sims is contributing editor and CRM Alert columnist for TMCnet.

To discover how contact centers can save money and increase productivity by making the switch to IP Telephony, be sure to attend TMC's IP Contact Center Summit May 24-26, 2005, in Dallas, Texas. IP Contact Center Summit is co-located with the Speech-World conference, where you can get expert guidance in the deployment of speech technologies to strengthen customer relationships.