How Cisco’s Ubiquisys acquisition could shake up the small cell market

How does Cisco's acquisition of Ubiquisys change things?

Cisco announced on Wednesday that it will be acquiring Ubiqisys for $310 million in a deal due to close before the end of this year. There are several interesting aspects to this deal, which is being seen as a good exit both for original founder Will Franks and the more recently-hired CEO Chris Gilbert, as well as for a bevvy of investors who have financed the company to the tune of $81 million since 2004.

Cisco’s stated reasons for the acquistion are absolutely of a piece with its public strategy for the past 12-18 months: the company wants to play everywhere in the mobile network (apart from in macro base stations in licensed spectrum) to build the “intelligent network” for mobile operators.

That intelligent network vision has extended from core routers and switches, through platforms that allow for backhaul traffic management to public-access WiFi products and licensed spectrum small cell products (through its partnership with ip.access). Added to that was its major acquisition of Intucell to boost its SON and automated network intelligence capability.

As well as adding its product capability to this Cisco vision, Ubiquisys brings a strong relationship with Intel for its SmartCell and intelligent edge visions – carrying out applications processing at the edge – and also knowledge of SON through implementations such as its ActiveSON. Cisco has said that this distributed SON approach complements the more centralised SON capabilities it acquired through Intucell.

However, the deal could also cloud several existing relationships leading to a shake-up of relationships in the market. Ubiquisys has been one of the leading players in defining the small cell market, through residential, entperprise and public access soutions. It did produce its own products, but it mainly sold software that hardware manufacturers, often Asia-Pac players such as Gemtek, Tecom and SerComm, would then use to build completed product. It also worked with NEC and NSN, using these vendors as sales partners where the vendors were winning end to end deals that required a small cell element.

Cisco’s Jared Headley has said that it sees that model continuing, providing both hardware and software to others.

But will the likes of NSN and NEC want to work with Cisco rather than with an independent entity like Ubiquisy?

NSN remained tight-lipped in a comment to The Mobile Network, although it did point out that it worked with a range of small cell partners. A statement from the company said: We are not commenting about competition and we use many suppliers in our small cell solutions”.

NEC, which formed its partnership with Ubiquisys in 2007, said in a statement: “Ubiquisys is one of NEC’s important small cell partners and we believe this mutually beneficial relationship will continue.”

One knock-on effect could be the impact on ip.access, which now stands somewhat alone as an independent developer of small cells. As it develops much of its own core technology, management systems and SON capability, ip.access is different to other providers such as Contela or Argela, which build products from a range of suppliers (Mindspeed chip plus Radisys Trillium platform, for example).

ip.access may see an opportunity in exploiting that independence, driving home the message that it is an independent provider of end to end small cell solutions.

From a Cisco point of view they have picked up a company that writes code that sits on an access point

Simon Brown, CEO ip.access, said one positive upside of the deal was that it made it clear to the market that ip.access, provider to Cisco of the AT&T Microcell residential femtocell, was about more than being a “Cisco shop”.

“There’s been a perception that we are a Cisco shop, but we have 100 live deployments, of which one is with Cisco, and we signed 40 customer contracts last year of which not one was with Cisco. So this should help the perception that we are and will be independent, and as we are now profitable that gives us financial independence as well,” Brown said.

That said, Brown pointed out that he didn’t expect the Ubiquisys acquisition to impact on ip.access’ current standing with Cisco.

“From a Cisco point of view they have picked up a company that writes code that sits on an access point. Cisco is adamant that this changes nothing and that we will work as we always have. The deal actually signifies Cisco’s intent to take a stronger role in small cells and potentially that could mean more opportunity for us. To us, they are a shareholder and they have said that they will continue to be a shareholder going forward.”

So does Brown see the chance for ip.access to strengthen relationships with other vendors? He replied, “How NEC and NSN react to having Ubiquisys as part of Cisco is a matter for them: there could be a bigger impact for these guys than for us. There’s no doubt we have dialogue with these companies in any case, that’s the nature of the small cell market.”

The Mobile Network asked Ubiquisys for comment for this article, but was referred to Cisco’s PR team.