8/1/2005 -- Cisco Systems Inc. last week added another entry in its ledger book of acquisition bedfellows, this time picking up intelligent network and service management product specialist Sheer Networks for at least $100 million in cash -- depending on the breaks, that is.

Cisco says Sheer's technology is designed to adapt to network changes, is scalable, and makes it easier to extend new technologies and services to simplify monitoring and maintaining complex networks. Depending on whether certain product development milestones are met after the acquisition closes, Cisco could pay anywhere from $97 million to $122 million for Sheer.

In contrast to past Cisco acquisitions, analysts had a somewhat lukewarm take on Cisco’s Sheer purchase, largely because (as was not the case with Cisco’s Airespace acquisition) there’s no immediate payoff.

“Cisco has taken a different route than some of its competitors to meet the challenge of next-generation service provisioning and delivery. The acquisition will potentially accelerate the availability or feature-richness of its internally developed next-generation management platform,” writes Glen Hunt, a senior analyst for carrier infrastructure with consultancy Current Analysis Inc.

In addition, Hunt notes, Sheer’s personnel and technology -- the company has been developing a layer of software that promises to make the underlying details of the network transparent to a broad range of management applications -- should also have a positive impact on Cisco’s product development, depending on how successfully Sheer is subsumed. “The immediate market impact is low since there will most likely be minimal short deliverables and it will take some time to integrate Sheer's virtual network model into the Cisco framework.”

Nevertheless, Hunt says, Cisco’s move does have long-term potential. “The acquisition strengthens Cisco’s overall management development team. Furthermore, the enlistment of third parties will enable Cisco to develop and sell device, network and service-level management applications enabling intelligent management across multi-vendor networks and network-based services -- which should have a much broader market appeal,” he concludes. “Cisco will also enable other hardware and software vendors to develop and deliver applications that can easily interoperate with Cisco applications through standards-based APIs. These same APIs will facilitate integration into service provider OSS/BSS environments.” -Stephen Swoyer