Cisco wrote another big check, this time to acquire Starent, a major player in the mobile/LTE space. And with the move, it may have leapfrogged a number of competitors. Starent and Cisco were somewhat competing previously, and Wall Street reports that it expected Juniper to announce a partnership with Starent that would have played in the AT&T procurement zone for mobile IP. Motorola was also a Starent partner, and to the extent that either of these deals was meaningful, they now have to be re-evaluated.
What may be most significant here is the procurement zone angle, in fact. Since we’re hearing that network operators worldwide are moving to a zone strategy, the acquisition of critical product mass in key zones is now vital for vendors. Cisco’s move signals an M&A wave to pluck up key components, since it’s now clear that major players will acquire vendors and thus kill simple partnership agreements.
The move will solidify a truth that’s been pretty visible for the last six months: LTE is where most investment focus will be in 2010 through 2012, so having a strong position there will be critical. LTE will accelerate disintermediation of operators, however, unless it’s coupled with a rational service-layer strategy.