Will Cisco Buy Pelco?

Author: John Honovich, Published on Sep 22, 2009

An IT analyst believes Cisco may acquire Pelco. He states, "This fits the mold of Cisco's acquisition strategy. It's a smaller company with a niche product."

While Cisco does focus on acquiring emergency technologies and incorporating it into Cisco's sales machine, Pelco does not seem to fit this 'mold'.

By Pelco acquisition standards, Pelco is an old company ("new" Pelco is 22 years old), 90%+ of its cameras sales are analog and the company has a very strong and well established sales channel (not as useful to Cisco who obviously has its own). Moreover, it's a big company (over $500 M USD in revenue in 2006) that was acquired in 2007 for $1.5 Billion USD. While Cisco sometimes purchases companies for more than $1 Billion USD (Scientific Atlanta being the biggest), this is rare.

Probably the most compelling reason why it is not a fit is the presence of a half dozen companies that are much better fits at lower prices. Cisco would not find much value in the analog cameras, classic DVRs, analog matrix switches, etc. that represents most of Pelco's sales. The most important asset to Cisco would likely be a portfolio of HD cameras. To that end, IQinVision, Arecont Vision and Lumenera would all be a better fit at a fraction of the cost ($200 M USD or lower). Even IndigoVision, Mobotix or Axis would be compelling choices though at prices higher than the first group.

[Update 2012: Cisco has yet to buy any video surveillance manufacturer.]

1 report cite this report:

Cisco Admits Failure, Partners with Pelco (v2) on Sep 20, 2009
Less than 3 years ago, Cisco threatened the physical security industry with disruption and innovation. Spending more than $100 Million USD, Cisco...
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