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Cisco Systems, Inc. (CSCO), Ubiquisys, And The Small Cell Industry

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Small cell technology is already the next big thing in the IT & telecom industry.

While French research firm Idate recently predicted femtocell (or small cells) shipments will reach 23 million units worldwide within 2017, generating revenues of €931 million (a growth rate of 159% per year), another research firm, Dell’oro Group, claimed that the femtocell market will reach shipments of 62 million units by 2014, for $4 billion in revenue worldwide.

Cisco Systems, Inc. (NASDAQ:CSCO)

Needless to say, every tech company is doing their bit to get a head start. Likewise, Cisco Systems, Inc. (NASDAQ:CSCO) recently announced its intent to buy Swindon, U.K.-based Ubiquisys for $310 million in cash (and retention-based incentives).

“Cisco is ‘doubling down’ on its small cell business to accelerate strong momentum and growth in the mobility market,” said Kelly Ahuja, senior vice president and general manager, Cisco Mobility Business Group. “By acquiring Ubiquisys, we are expanding on our current mobility leadership and our end-to-end product portfolio, which includes integrated, licensed and unlicensed small cell solutions that are tightly coupled with SON, backhaul, and the mobile packet core. For service providers, Ubiquisys supports cost effective coverage and capacity that delivers a differentiated customer experience.”

Before we delve in further into the deal, let us see what other companies are doing.

AT&T Inc. (NYSE:T) has updated much of its network to accommodate the positioning of HSPA+ metrocells around the country, but more advanced multi-standard metrocells are waiting to come in a year or so, as per a senior executive.
QUALCOMM, Inc. (NASDAQ:QCOM) will be showing off its heterogeneous networks. Heterogeneous networks are the mix of large tower technologies and small cell clusters. Their main problems have been getting the two technologies to interact with each other without interference or static, and also creating a stable interface between the two platforms.

At the recent Mobile World Congress 2013, Alcatel Lucent SA (ADR) (NYSE:ALU)‘s Director of Wireless Marketing Chris Kapuscinski talked about the company’s latest development in the field of small scale technology.

“It is very different from macro network deployment,” he explained, “because the scale is so very different. In a metro cell layer within a city center we will likely have hundreds more cell sites and carrier-grade Wi-Fi access points to cover the geography than would be the case for a macro network. The radio planning for that deployment requires almost constant calculations and re-calculations throughout the process.”

With these tech biggies already involved in the research and development of the next big thing, how can Cisco Systems, Inc. (NASDAQ:CSCO) be left behind? And what better than an acquisition of Ubiquisys at this point? With strong support from technology giants such as T-Mobile USA, Inc. and United Microelectronics Corp (ADR) (NYSE:UMC), Ubiquisys, the developer of 3G and LTE intelligent cells, has been ranked #1 in the latest Indoor Small Cell Vendor Matrix in terms of innovation and implementation, released by ABI Research.

“Ubiquisys takes the top spot on the back of its continued commitment to innovation with technologies like SideStep, CloudBase, and EdgeCloud, while keeping its commercial contracts ticking through partnerships with NEC and Nokia Siemens Networks,” commented Aditya Kaul, Principal Analyst and Practice Director, Mobile Networks, ABI Research. “Ubiquisys’ dedicated focus on the small cell area allows it to stay a couple of steps ahead of its larger rivals when it comes to introducing innovative techniques that should shape the future of the small cell market.”

With strong business collaboration with Texas Instruments Incorporated (NASDAQ:TXN) and Intel Corporation (NASDAQ:INTC) since 2011, the company has achieved solid progress. In September 2012, it was named as one of Britain’s fastest-growing private technology companies in the Sunday Times Hiscox Tech Track 100. In other words, Cisco Systems, Inc. (NASDAQ:CSCO) did make the right choice by going for Ubiquisys.

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