Cisco to Buy Smart-Grid Operator Arch Rock

Posted Sep 2nd 2010 11:00AM by Tom Taulli
Filed under: Competitive Strategy, Cisco Systems (CSCO)

A company the size of Cisco (CSCO) needs to find massive market opportunities. So why not the electric grid? No doubt, it needs lots of improvement. In fact, there is an emerging trend towards making it much smarter. And no doubt, Cisco's technology can be a big help.

At the same time, the company is revving up its acquisitions machine. The latest deal is for Arch Rock. The financial details were not disclosed.

Founded in 2005, Arch Rock uses Internet-based wireless sensors to monitor electricity usage. Ultimately, this allows for more efficiency -- and yes, a greener planet.

However, acquisitions are only part of the strategy. To get momentum, Cisco realizes it needs to strike key strategic relationships. For example, the company has entered an alliance with Itron (ITRI), which is a top metering vendor. The firm will help develop a new smart-grid platform.

So how big is the opportunity? The market for smart-grid technologies is expected to reach over $200 billion.

Thus, for Cisco shareholders, this is certainly something that will move-the-needle. But of course, it will take some time -- at least three to five years to get traction.

Tom Taulli is also the author of several books, including the Complete M&A Handbook as well as the upcoming book, All About Short Selling.

Tags: Arch Rock, CSCO, inthenews, Itron, smart grid