ThinkSmallCell Interview with Jared Headley, Cisco, about the Ubiquisys Acquisition

Jared HeadleyCisco has just announced their intention to buy Ubiquisys for $310M. We spoke with Jared Headley, Director of Service Provider Mobility at Cisco, to establish why they made the purchase, what will happen to Ubiquisys staff, and how Cisco will take this forward.

He revealed some of the unique capabilities they valued most within Ubiquisys, explains their go-to-market plans and highlights that it isn't just about coverage or capacity.

How will Ubiquisys be absorbed into the Cisco organisation, and will it lose its brand identity?

We expect to close the transaction during Cisco's Q4 fiscal period, between May and July 2013. Ubiquisys will be absorbed into Cisco's Small Cell Technology Group, led by Partho Mishra, which currently also includes:

  • Small Cell solutions group;
  • (Development) Engineering;
  • Femtocell program for AT&T 3G Microcell; and
  • Small Cell router (Cisco ASR 901)

Our goal is that Ubiquisys becomes part of the Cisco organisation, but remains intact with its own structure. Their sales people will move into Cisco's small cell sales organisation; the Advanced Services staff (i.e. the installation/commissioning teams who actually make it work in the field) will move into our mobile services organisation. We continue to work on how best to handle the Ubiquisys brand itself, and this will be a post acquisition discussion.

Why did you buy Ubiquisys rather than ip.access or another small cell vendor?

Firstly, it's important to recognise that this isn't a standalone purchase. We've spent some $2 billion in the last 6-9 months including this deal as part of our build, buy and invest strategy.

Starting from a clear set of requirements and having assessed potential candidates, Ubiquisys was the best fit from a technical and resource perspective.

I'd say there are several specific areas where Ubiquisys really are unique:

  1. A great software stack. Building on a field proven, carrier-grade system, they have a good mix of distributed SON (Self Organising Network) technology that pairs up well with our centralised SON solution from Intucell [another recent Cisco acquisition]. The SmartCell concept, which caches data at the edge of the network, is also very attractive and unique.
  2. Low power consumption, which comes from both the underlying chip technology and how its been used. This is critical for us when looking to install the technology across our 17 million carrier-grade Wi-Fi access points using Power over Ethernet. The ability to remain within the power consumption envelope opens the door for an easier upsell opportunity.
  3. Software lifecycle management, which Ubiquisys brand as Cloudbase, provides careful control of software licences and distributed software version updates.

At the same time, ip.access remains a strong partner in which we remain invested and will continue to work with them on our femtocell program.

Looking further ahead, as a business we've made it clear that we will continue to invest in future acquisitions as part of our wider build, buy and invest strategy, but I can't speculate how or when that will manifest itself next.

How will this affect Ubiquisys' other sales channel partners, such as NSN and NEC, and manufacturing partners such as SerComm and Tecom?

Fundamentally, Ubiquisys sold software. We will continue to maintain sales channels through partners and will honour any existing contracts, whether with sales channel or ODMs.

Our intention is to sell both software and combined software/hardware, so both sales models will be kept in place going forward.

Ubiquisys were typically more focussed on indoor solutions (especially Enterprise). Do you see a refocusing of their roadmap in that direction in the future?

Our strategy starts indoors, but certainly will include outdoor small cells over time. We've not yet announced any specific outdoor products but may do so in the future.

It really goes back to the discussion about Intucell again. Mobile operators have told us that only after we had figured out how to work with a macrocell vendor, then they would become more comfortable using our products for outdoor locations. Intucell gives us that solution and allows us to satisfy that concern.

A second factor is that more of the traffic demand and future growth is indoors.

Cisco also has a strong position in Wi-Fi, both enterprise and service provider. We want to be sure to build on that with an easy upgrade path.

For these reasons, we've chosen to focus on indoor solutions first.

In the longer term, we've already seen how others have taken Ubiquisys solutions, packaged them for outdoor use, and so the opportunity to use small cells outdoors is part of our stated intent.

Ubiquisys was at an early stage of 4G/LTE product development. How quickly would you expect this to mature and how urgently do you think this capability is required?

We have customers who we could sell 4G small cells to within the next year or so. Let me state it clearly that 4G is absolutely part of our plan. Mobile operators have told us how important this is to them and their deployments – we've heard that from multiple regions worldwide.

Whether this initially uses a single mode 3G/Wi-Fi or LTE/Wi-Fi or multimode 3G/LTE/Wi-Fi combination varies between different operators. We are still working on our roadmap and detailed plans, but 4G is a key part of the strategy. In fact, we are already supporting 4G small cells today through our core network and small cell gateway.

Any last thoughts?

We at Cisco are really excited about the opportunity which small cells bring. If you look at our list of recent acquisitions, you can see that this all plays to the same strategy.

We're not just talking about solving the capacity and coverage issues, but providing the ability to monitise the mobile Internet. We can already show a number of real examples where we have successfully worked with operators to monetise location data (e.g. advertising).

By growing our portfolio with a wider range of products and talented individuals such as found at Ubiquisys, we will continue to make further headway.

Further reading:

Cisco blog discussing the acquisition

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