Monday, August 08, 2005

Nokia to be Taken over by Cisco?

Now this is a pretty strange rumor that seems to be circulating. It looks like Nokia may get bought out by Cisco. Now that would be an interesting fit I think. The person in the article is right about there being no synergies between the two companies. But these buyouts don't seem to be only about synergies though.

Cisco's routers, and even wireless broadband, are becoming more staid and less high growth businesses. Adding a cellular arm may be a way to get a shot of growth into their arm. Mobile phones are still growing at a decent clip as people change to the phones that can do more broadband related activites (watch TV, play games etc.) A mobile phone arm will certainly drive the sales of more routers as phone companies ramp up their networks for the new features of the phones that Nokia is developing.

It would be a means for Cisco to control the distribution of as well as the reciever of the content at the same time. Kind of like a company that makes the projectors owning a bunch of theaters. In any case they would probably keep Nokia as a wholly owned subsidery and just have Nokia pump up the revenue figures and growth metrics. They probably won't fold Nokia into Cisco. If the rumors are true Cisco will end up better known as a communication conglomerate and less as a networking equipment manufacturer.

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