Last Thursday, Cisco Systems announced it would pay $500 million for home networking company Linksys Group. A day earlier, 3Com reached out to China, with a $160 million investment in a joint venture with Chinese gear maker Huawei, to create a comprehensive enterprise networking business. Superficially very different deals, the two moves underline the trend in high technology toward building big offerings for business buyers.
Just as Hewlett Packard purchased Compaq Computer to fill out its server line, or IBM bought Rational Software to have its own software development tools business, Cisco"s Linksys deal boosts its comprehensive line. Smaller player 3Com"s deal more resembles the kind of alliances Sun Microsystems is striking with consultancies to present customers with a full-service offering.
Cisco"s deal with Linksys does not on the surface seem like a corporate play. It is the first time in over 60 acquisitions that Cisco made its purchase into a separate division, with its own brand name. That may be good for operating margins--Cisco salespeople are more used to meeting chief technical officers at Forbes 500 companies than selling tiny antennas to managers at Best Buy--but deeper down there is a corporate connection.