(Adds details, analyst comment, byline and background)
By Poornima Gupta
SAN FRANCISCO, Sept 2 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
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
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)