Cisco Sparks a Media Flame

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Cisco Systems (Nasdaq: CSCO  ) is blurring the line between network equipment and server systems. In the process, the company is moving media distributors and consumers one step closer to the "watch it anywhere, anytime, on any device" ideal. But it will take more than a clever network setup to reach that final destination. Entire industries need to change.

What's up?
The latest media processing beast out of Cisco's labs is the MXE 3000, a high-powered transcoding central that aims to take video in any format and deliver it to the end user in basically any other format. The translation between different media formats is supposed to be transparent to the consumer, highly automated and integrated into the network itself, and it's supposed to just work. And oh boy, video distributors need that kind of help today.

For example, I have this fancy Verizon (NYSE: VZ  ) FiOS service with a "media manager" DVR. It lets me record TV shows on one box (the DVR itself) and watch it on other digital cable boxes around the house. So far, so good -- Verizon controls the video format from the source to my screen, and it works.

Paradise already, right?
But there are limitations in Verizon's system. A recent beta program would let me stream videos from other sources besides the actual DVR box, such as Google's (Nasdaq: GOOG  ) YouTube and my own video files. And while it was cool to get these clips onto my big-screen plasma TV, the transcoding often failed or left ugly artifacts behind. Besides, Verizon's hardware didn't do any of it. Instead, software installed on my own computer did the heavy lifting. This is clunky and ugly, and while geeks like me can handle the setup, I'll bet that four out of five regular couch potatoes will ask the fifth one for a better manual or a new computer.

With something like Cisco's new hardware installed somewhere in Verizon's data center or service station, all that haggling between video formats could conceivably have been done without any help from my own systems. YouTube clips would be intercepted and properly formatted on their way from Mountain View to my living room. My personal videos would have to be sent out to the service provider for a quick fix, but considering the massive two-way bandwidth in the fiber-optic FiOS system, this should not be a problem.

Extending the reach
Similar services could then be concocted for cell phones (a natural stretch for Verizon, while Comcast (Nasdaq: CMCSA  ) might feel queasy about this step), portable media players like your Apple (Nasdaq: AAPL  ) iPod Touch, or anything else with a screen. From there, we'd just have one more step to take before arriving in the Shangri-La paradise of unfettered media distribution: licensing.

The technical side of the equation is nearly complete, though it will take a few years to roll out these media processors or their equivalents across an entertainment-hungry nation. That's okay, and the networks can take their sweet time, because it'll probably take even longer to convince Disney (NYSE: DIS  ) and its content creator peers that their precious video materials belong on every screen in reach.

All quiet on the Western front
Studios occupy one side of this Maginot line, and consumers the other. In the middle, distributors like the cable networks and rental specialist Netflix (Nasdaq: NFLX  ) are trying to untangle a complex web of longstanding conventions and contracts between the media giants and their traditional network partners. Somebody will have to prove beyond a shadow of a doubt that piracy-riddled digital distribution can be at least as profitable as tightly controlled broadcast network partnerships. Guys like Cisco are just there to provide the tools to get it all done.

And it will get done. Trust me on this.

Further Foolishness:

Google is a Motley Fool Rule Breakers pick. Netflix, Walt Disney, and Apple are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in Netflix, Google, and Disney, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 790010, ~/Articles/ArticleHandler.aspx, 10/22/2016 7:47:13 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 10 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
CSCO $30.15 Down -0.01 -0.03%
Cisco Systems CAPS Rating: ****
AAPL $116.60 Down -0.46 -0.39%
Apple CAPS Rating: ****
CMCSA $64.06 Down -0.29 -0.45%
Comcast CAPS Rating: ***
DIS $93.03 Up +1.00 +1.09%
Walt Disney CAPS Rating: *****
GOOGL $824.06 Up +2.43 +0.30%
Alphabet (A shares… CAPS Rating: *****
NFLX $127.50 Up +4.15 +3.36%
Netflix CAPS Rating: ***
VZ $48.20 Down -0.94 -1.91%
Verizon Communicat… CAPS Rating: ****