Cisco Systems, the biggest vendor in IP (Internet Protocol) networking, is diversifying into social networking.
The router pioneer has agreed to acquire Five Across, a social-networking software company in San Francisco. Terms of the acquisition, which was announced late Thursday in California, were not disclosed. Cisco expects the deal to close in its fiscal third quarter, which ends April 28.
Cisco doesn't plan to set up its own social-networking site to compete against News Corp.'s MySpace or Facebook. Instead, it will use Five Across technology to create software that will help enterprises better connect with their customers. In addition, service providers may be able to build services with the technology and sell them to their business customers, Cisco said.
Five Across sells a software platform called Connect Community Builder. It includes a variety of features that enterprises can build into their Web presence for their customers, such as individual profile pages, friend lists, discussions, and posting of blogs, videos and podcasts. The company, founded in 2003, has just 11 employees, according to Cisco. Last year NHL Enterprises L.P.'s National Hockey League launched a site for hockey fans, called NHL Connect, using Five Across software.
The acquisition is the first by Cisco's recently formed Media Solutions Group and part of Cisco's expansion into both the consumer and media categories. One target market for the Five Across technology will be entertainment and broadcasting companies such as The Walt Disney Co. and Comcast.
But Cisco also expects social networking, like other consumer tools such as instant messaging, to be embraced by general enterprises. Consumers are now demanding social networking capabilities and want to see them on companies' Web sites, according to Cisco.
Traditional media providers are ripe for using social networking, said IDC consumer analyst Danielle Levitas.
"There's quite a bit of need for experimentation from [traditional] media companies to show their stockholders they can take advantage of the Web and they're not going to cede it to new media companies," Levitas said. A good social-networking component to a media company's Web site could help foster viewer loyalty or even be a place to test new shows among core viewers, she said.
Consumer electronics and PC companies could also take advantage of social networking, hosting communities of consumers to share tips and advice, augmenting their technical support offerings, Levitas said.
Meanwhile, social networking, with its constant conversations and user-generated content, is also good for Cisco's core business of selling network infrastructure, Levitas said.
"Web-based content is incredibly bit-heavy," Levitas said. Social networking brings end users into the game so there is a lot of data coming upstream from the edge of the network as well as downstream from the company.