Cisco Buys Video Startup Arroyo, Brings on Novell Co-Founder

Cisco Systems Tuesday said it's acquiring video startup Arroyo Video Solutions in a $92 million deal.

Plans call for San Jose, Calif.-based Cisco to integrate the Arroyo technology into its IP-NGN (Next Generation Network) architecture to help its service provider customers distribute on-demand video content across various devices, including televisions, PCs and mobile handsets.

The move complements Cisco's service provider business and its move into the home market, which was bolstered by its February acquisition of set-top box maker Scientific-Atlanta and its 2003 acquisition of SOHO networking vendor Linksys.

Arroyo executives expected to join Cisco include co-founder and CTO Paul Sherer, formerly CTO of 3Com, and co-founder and chief scientist Drew Major, a co-founder of Novell who was inducted into CRN's Industry Hall of Fame in 1999.

Cisco expects to close the acquisition in its fiscal 2007 first quarter, which ends Oct. 31. After the deal is completed, Cisco plans to incorporate the Arroyo team and product portfolio into its Cable & Video Initiatives Group under Mike Volpi, senior vice president and general manager of Cisco's routing and service provider technology group.Privately held Arroyo, Pleasanton, Calif., was founded in 2002 and has 44 employees.

The acquisition is Cisco's second deal this month. Two weeks ago, it created a new subsidiary by taking a majority stake in data center startup Nuova Systems. Earlier this year, Cisco also invested in Akimbo, another on-demand video startup.