Oracle’s Acme Packet Acquisition Could Make Life Interesting for Cisco

Oracle has started off 2013 with yet another acquisition, purchasing Acme Packet for roughly $1.7 billion. The acquired company builds VoIP and data-transmission services and applications; it counts 89 of the world’s top 100 communications companies as part of its client base.

“The proposed acquisition of Acme Packet is another important piece in Oracle’s overall strategy to deliver integrated best-in-class products that address critical customer requirements in key industries,” Oracle president Mark Hurd wrote in a Feb. 4 statement.

It’s also an important piece in Oracle’s strategy of ramming Cisco head-on. The latter has also focused on strengthening its technology bench via acquisitions; last month, it announced plans to acquire Intucell, a privately held Israeli company that builds self-optimizing network (SON) software—the better to configure, optimize and repair cellular networks. In theory, those Intucell assets will allow Cisco to further support multiple applications and devices on a widely dispersed network.

Late in 2012, Cisco also announced plans to acquire cloud-networking firm Meraki, which builds products such as Ethernet switches and security appliances for small and midsize businesses.

Although Cisco once positioned itself as a purveyor of consumer and enterprise networks, it’s pulled back in recent years from the former; rumors circulated in December that it would sell off its Linksys division, which markets Wi-Fi routers and network accessories to home networks and small businesses. By the second fiscal quarter of 2011, Cisco’s consumer-related revenues plunged by a significant percentage, while its core IT infrastructure business faced ever-growing challenges from Hewlett-Packard and others. That led Cisco to push more emphasis onto its enterprise business.

But the enterprise business is an insanely lucrative one, and the world’s largest IT vendors are always looking for ways to boost their margins and enter new markets. If Oracle means to enter the enterprise-communications market in a big way, it could make life a little more interesting for Cisco. Time will tell.


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