Cisco Sells Set-Top Business To Technicolor For $600 Million

Cisco Systems said Wednesday that it will sell its Connected Devices business, comprised of its service provider video customer premises equipment, to French communications and media provider Technicolor for $600 million.

Incoming Cisco CEO Chuck Robbins has said that Cisco will be working toward streamlining sales, services and engineering to focus on areas it wants to grow. Shedding the set-top box business line will allow Cisco to refocus its investments in service provider video toward cloud and software-based services businesses, according to the San Jose, Calif.-based company.

The deal indicates that Cisco wants to focus on its networking, infrastructure and Internet of Things business, said David Johnson, vice president of sales and marketing for The Fulcrum Group, a Keller, Texas-based Cisco partner. ’Cisco isn’t trying to be a part of the devices of the IoT, which is what their set-top boxes are. It’s a smart move on their part to stay focused,’ he said.

Under the terms of the deal, Cisco will sell its Connected Devices business line of video and modem products to Technicolor. Product development and customer support will shift to Technicolor, and the products will fall under Technicolor’s Connected Home business line.

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’By combining their strengths and leading video expertise, from content creation to in-home delivery, the two companies will accelerate innovation and forge a leading entity that network service providers can rely on for their next-generation Connected Home experiences,’ Technicolor said in a press release.

The companies also signed a strategic partnership agreement to develop and deliver next-generation video and broadband solutions and services, according to a blog post from Cisco. Hilton Romanski, Cisco’s senior vice president and chief strategy officer, also will join Technicolor’s board of directors.

Handing over device production to Technicolor will help Cisco focus on Internet of Things services, said Rick Jordan, director of sales and strategic alliances at Toronto-based Tenet Computer Group, a Cisco partner.

’I think [Cisco is] getting out at the right time, and from the consumer side, it looks like Technicolor is going to be much more committed to it,’ Jordan said. ’It comes down to core competency and where Cisco wants to go with IoT.’

While the deal doesn’t directly impact Tenet Computer Group's customers, Cisco’s renewed focus on its core business will be beneficial for partners in the long run, he said.

The deal is expected to close at the end of Cisco’s fiscal second quarter in 2016 and is subject to regulatory approvals. The Connected Devices business will continue to operate as part of Cisco in the meantime, the companies said.