Cisco Systems today announced the acquisition of privately owned UK Internet technology company Calista for $55 million in stock.
The deal gives Cisco access to Calista's technology that lets legacy phone systems from different vendors work together using Internet based phone exchanges.
Analysts said the move will help Cisco compete against rivals Lucent Technologies and Nortel Networks by ensuring its Internet Protocol (IP) equipment interoperates with their large installed base of telephony equipment.
Calista's technology works at the network layer by emulating the closed PBX architecture of different digital phone manufacturers for large businesses.
Using IP to interconnect different legacy phone systems, the technology will allow Cisco to team Internet phones with legacy digital phones.
The acquisition builds on Cisco's aim of providing IP-based data, voice, and video services over an Internet infrastructure.
IDC analyst, Pim Bilderbeek said Cisco's move steps up their battle with Lucent Technologies and Nortel Networks, which both have a large installed base of PBX and other telephony equipment.
"Cisco has no voice switches or PBX installed, whereas Lucent and Nortel do," he said. "Cisco is trying to make it easier for the world of routers and IP to come together with voice and PBX."
"To compete with the folk at Nortel and Lucent, they must make sure their IP equipment such as routers and switches can work with the older voice-based stuff," he added.
Cisco said the deal was expected to be completed before November and would result in a one-time charge of about one cent a share on an after tax basis.
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