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SAN FRANCISCO, Sept 2 (Reuters) - Network equipment maker Cisco Systems Inc (CSCO.O) said on Thursday it was buying start-up Arch Rock for an undisclosed sum as it aggressively moves to expand in the growing smart grid market.
The news of the acquisition comes a day after the networking giant said it was teaming up with smart meter maker Itron Inc (ITRI.O) to develop a communication platform for smart grids.
Modernizing the aging grid and deploying smart grid technologies is a market that is forecast to grow to $200 billion over the next five years, according to Pike Research.
The market was valued at $21 billion last year. An infusion of federal funds into updating the electricity supply chain has also helped in growing the market for smart grid technologies.
Cisco "has been very vocal in characterizing the smart grid opportunity as at least as big as or 'eclipsing the size of' the Internet opportunity," said Ticonderoga Securities analyst Brian White. "Longer term, we believe the smart grid transition could meaningfully increase the company's overall addressable market opportunity."
Cisco, which is working with a number of utilities including Duke Energy Corp (DUK.N) and NextEra Energy Inc (NEE.N), has identified $20 billion in opportunities in the next five years.
Arch Rock specializes in wireless sensor technology for smart grid systems, or utilities systems with meters connected to the Internet, allowing companies to better monitor and control energy use.
"This acquisition further positions Cisco as a strategic partner to utilities working to better manage power supply and demand, improve the security and reliability of energy delivery, and optimize operational costs," said Laura Ipsen, senior vice president and head of Cisco's Smart Grid business.
The acquisition is expected to be completed in the second half of this calendar year, Cisco said. (Reporting by Poornima Gupta; additional reporting by Ritsuko Ando in New York; editing by Andre Grenon)