Cisco's Calista Deal Challenges Lucent, Nortel, Others

SAN FRANCISCO: Cisco Systems' $55 million acquisition of UK-based Calista Inc. looks like bad news for telecommunications competitors Lucent, Nortel, NEC, Siemens, Fujitsu, and Ericsson, according to industry research firm Zona Research. The Cisco-Calista combination will mean that enterprise customers will not need new phone equipment in order to integrate voice into infrastructure based on Internet Protocol (IP), Zona says. Cisco says the acquisition, expected to close by the end of October, will allow enterprises to "seamlessly transition from circuit-based PBX phone systems to Internet-based PBXs. This acquisition also supports Cisco's strategy to enable new IP-based data, voice and video services, such as unified messaging, over an open, Internet-based infrastructure." Zona said the deal puts Cisco squarely in competition with telecommunications equipment suppliers. "For Cisco, this acquisition adds to its portfolio of Internet-based voice architectures for large businesses," Zona says in a report released Aug. 16, the day the acquisition was announced. "If Cisco achieves its objective of integrating data and voice networks, this deal is likely to mean lower communications costs for large customers because the PBX system simply becomes software in the router. For the industry as a whole, the effect on the PBX equipment market will be considerable as Cisco's very large hat is now conspicuously in the ring."