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Cisco to Buy Inlet Technologies for $95 Million

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Cisco (s csco) announced Friday that it plans to buy Inlet Technologies, a manufacturer of video-encoding and transcoding products, for $95 million. The acquisition, expected to close in the first half of the year, is designed to round out Cisco’s portfolio as part of its new Videoscape solution, which is aimed at helping service providers enable the integration of broadcast, Internet streaming and on-demand content across a variety of screens.

Inlet, which was founded in 2003, makes equipment that is used by the BBC as well as Major League Baseball for its online streaming service. The company’s gear also helped power the NBC’s (s cmcsa) online streaming of the 2010 Winter Olympics.

But the real gem in the deal for Cisco is Inlet’s “adaptive bitrate technology” (ABR). The company’s Spinnaker transcoding appliances for livestreaming use this technology to dynamically adjust the video stream to the end-user’s bandwidth and device capabilities in real-time. Cisco plans to use if to beef up its offerings for over-the-top delivery capabilities as it rolls out Videoscape solution, the new Cisco effort announced at CES 2011.

As more consumers watch video online — and service providers look to provide online video streaming to accompany their traditional pay TV services — ABR becomes important, because the technology helps eliminate delays as it adapts the video stream to the conditions of the network. The first company to gain attention for using the technology was Move Networks, but as Microsoft (s msft) and Adobe (s adbe) announced similar technology, and Apple (s aapl) implemented its own, Move was pushed aside.

Inlet  has seen significant interest in its Spinnaker appliance because it is optimized for handling Apple’s version of ABR. The company was involved early with Apple, and because of this, was one of the first companies to enable ABR for iPhone delivery. This, and deals with Microsoft to power early implementations of its Smooth Streaming ABR, helped Inlet gain more momentum and was likely one of the key considerations for Cisco in the deal.

This isn’t the first acquisition by Cisco in support of its broader Videoscape product suite. Last year, they acquired Extendmedia, an online video video platform player that’s now the centerpiece technology for Cisco Videoscape’s content management system.

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