11/30/2011 -- On the surface, Cisco Systems Inc.'s acquisition moves sometimes don't make a whole lot of sense. Take Cisco's acquisition last month of BNI Video, a privately-held video services provider. Cisco plans to incorporate BNI's assets into Videoscape, its service delivery platform for IP-based devices.

Cisco announced Videoscape at this year's Consumer Electronics Show (CES) in Las Vegas, with CEO John Chambers telling launch attendees that "Video will be the next voice." To that end, Cisco unveiled a Videoscape platform consisting of a media gateway (designed to integrate voice, video, and data), an IP set-top box, and client software for a range of devices, including TVs, tablets, and smartphones. Since then, Videoscape hasn't exactly been a slam dunk, however: in August, for example, senior vice president Enrique Rodriguez -- whom Cisco had charged with overseeing its Videoscape push -- abruptly resigned.

That's what makes Cisco's acquisition of BNI both intriguing and -- in a sense -- critical. At the very least, says Ron Westfall, digital media infrastructure analyst with consultancy Current Analysis Inc., its $99 million price tag is a demonstration that Cisco isn't afraid to put its money where it's mouth is, Videoscape-wise. But there's something more here, too, Westfall continues.

After all, BNI isn't just a video or streaming technology provider. It doesn't simply develop technologies designed to support content delivery networks (CDN), or to otherwise accelerate the delivery of video content. What's perhaps most noteworthy about BNI is its specialty focus on analytics, Westfall argues.

"With operators intent on monetizing and managing the OTT content flowing through their networks, Cisco addresses two pain points with the acquisition," he claims. "First, the BNI video back-office and control plane technology enables operators to streamline their management and view of the devices and traffic on the network," he continues. "Second, the BNI CDN analytics technology gives operators a critical tool to justify their investment in internal CDN technology, as CDN analytics will become requisite for understanding consumer -- and enterprise -- viewing patterns in multi-screen environments."

In this respect, Westfall continues, BNI fills a gaping void in Cisco's Videoscape product line. "'[Cisco] needed to acquire the BNI Video technology to address the lack of CDN analytics and video back-office and control plane management tools in its Videoscape portfolio," he explains, pointing to Cisco's recent acquisitions of ExtendMedia, which gives it both video-on-demand (VoD) and linear content management technology, and Inlet, a company that specialized in ABR video processing. "This enables Cisco to meet both the pay-TV and evolving OTT management and monetization challenges that operators confront in increasingly complex multi-screen environments," he points out.

For this reason, Westfall contends, Cisco's acquisition of BNI is a Surprisingly Big Deal. For one thing, Cisco's recent efforts in the CDN space will "oblige rivals to respond to its high-profile moves such as acquisitions," he observes. And, while Cisco's previous investment in BNI at least augured the possibility of its ultimately acquiring that company -- Westfall says the acquisition could nevertheless catch some competitors off guard.

"[L]ocking up of BNI's CDN analytics assets gives Cisco a leg up in this fast-emerging area of operator priority," he concludes. "Now, rivals will at least need to refresh how their solutions and partnerships meet the burgeoning CDN analytical needs of operators."
-- By Stephen Swoyer