Online Video Helps Cisco Grow

    January 15, 2007

The rapid growth of online video is forcing service providers to upgrade their networks to deal with the increased Internet traffic and broadband demand. Companies that provide infrastructure for the Internet are seeing their products sell at a rapid rate and are turning healthy profits.

Companies like Cisco Systems, Juniper Networks, and Alcatel-Lucent are all cashing in on the online video explosion. The products they make like routers and switches direct traffic over the web and help companies manage traffic as well as direct large amounts of data.

Zeus Kerravala, a network infrastructure analyst with Yankee Group said in an AP article,” Cisco would like to see video delivered to every device everywhere, if you’re looking to something to create the next wave of network upgrades, video is front and center. It drives bandwidth like we’ve never seen before.”

Online video is expected to grow from $1.3 billion last year to $7 billion by 2010, according to the research firm Parks Associates. Even so companies are still struggling with ways to generate revenue while avoiding the copyright infringement issue.

Around 210 million people have a broadband connection globally, and the number is expected to increase to 40 to 50 million new subscribers each year, according to networking and telecommunications researcher Dell ‘Oro Group.

Increased traffic and video’s large bandwidth requirements are creating a golden opportunity for networking companies.

Cisco has benefited the most from video. Their shares are up 50 percent from a year ago and financial analysts believe the company’s annual revenue can grow 20 percent this year to around $34 billion.

“This is going to be a multiyear phenomenon – right now you’ve got the YouTubes and the consumer applications sucking up capacity on the networks, and we haven’t even had IPTV deployments in any significance yet,” said Troy Jensen, senior research analyst with investment bank Piper Jaffray & Co. “But once this couple-year investment cycle winds down, it could potentially be tough times again.”

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Mike is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.