Scientific Atlanta, Inc. was a Georgia, United States-based manufacturer of cable television, telecommunications, and broadband equipment. Scientific Atlanta was founded in 1951 by a group of engineers from the Georgia Institute of Technology, and was purchased by Cisco Systems in 2005 for $6.9 billion after Cisco received antitrust clearance for the purchase.[1][2] The Cisco acquisition of Scientific Atlanta was ranked in the top 10 of largest technology acquisitions in history and was Cisco's largest acquisition to date.[3][4] Prior to the purchase, Scientific Atlanta had been a Fortune 500 company and was one of the top 25 largest corporations in Georgia.[5][6][7]
Scientific Atlanta was considered by many to be "the patriarch of Atlanta's technology industry for nearly six decades" and is sometimes referred to as "Atlanta's Microsoft or Hewlett Packard".[8]
Products
Scientific Atlanta is a supplier of transmission networks for broadband access to the home, set-top cable boxes, cable modems and digital interactive subscriber systems for video, high-speed Internet, voice over IP (VoIP) networks, and worldwide customer service and support.
Products for the cable TV industry, from fiber optic network equipment for head-end media acquisition, to Explorerdigitalcable boxes (as well as universal remotes to go with them), and cable modems (formerly branded as WebSTAR until the Cisco acquisition in 2006), dominate Scientific Atlanta's sales. Scientific Atlanta's most popular modem is the Scientific Atlanta 2100, because it is often supplied by cable providers like Spectrum, Comcast, Time Warner Cable and Cox Communications. Scientific Atlanta also supplies distribution technology to networks such as Bloomberg Television, CNN, ESPN and many others.
In addition to providing products for traditional coaxial and fiber service operators, Scientific Atlanta also expanded its IPTV solutions offerings after the merger with Cisco.[9] Before this, on August 18, 2005, Scientific-Atlanta and SBC (now AT&T) signed a deal for Scientific-Atlanta to be the exclusive set-top provider for SBC U-verse TV.
History
Former Scientific Atlanta logo, used until Cisco acquisition. Still used on certain models of their cable modems.
Founded in October 1951 by six Georgia Tech Research Institute researchers: James E. Boyd (future station director), Charles Griffin, Robert E. Honer (MSEE), Gerald Rosselot (station director), Lamar Whittle and Vernon Widerquist who each invested $100.[10] In late 1952 Glen P. Robinson became the seventh member.[11] Scientific Atlanta was started to produce technology developed at the research station.[12][13][14] After the fledgling company's first contract resulted in a $4,000 loss, Robinson bought out all but one of the original investors, and paid them each back their original $100.[14]
Glen P. Robinson was the CEO of Scientific Atlanta for 20 years, and chairman of the board for an additional eight years, until he retired from the company in 1979. Scientific Atlanta grew dramatically; it earned $3.1 million in revenue in 1962 and approximately $200 million when Robinson left. Sidney Topol served as its president from 1971–83, CEO from 1975–87, and chairman of the board from 1978-90. During his tenure, the company grew in sales to more than $600 million. During the 1970s the company developed the concept of cable/satellite connection, which, in working with HBO and transportable earth stations developed by TelePrompTer Corporation and manufactured by Scientific Atlanta, established satellite-delivered television for the cable industry.[15]
During the 1960s Scientific-Atlanta earned a place in the space and defense industries as a manufacturer of electronic testing equipment for antennae. By the end of that decade the company had added instruments for testing telephones and acoustic devices with defense applications. As a military contractor, the company distinguished itself by manufacturing unique electronic instruments for the federal government. According to Business Week, Scientific-Atlanta was a company "fascinated with communications esoterica."
Scientific-Atlanta applied its energy to opportunities in new fields with large growth potential and few barriers to entry. The company sought out products that were either low-cost and high volume or had a very high price tag. "You've either got to make 10,000 of something worth $100 to $200, or several of something worth $500,000 or $10 million," Topol told the New York Times. The company planned to make the low-cost, high volume end of this equation profitable through aggressive research and development and a strong marketing effort. In its annual report, as reprinted in David C. Rickert's Harvard Business School case study of Scientific-Atlanta, the company stated: "Scientific-Atlanta operates under a disciplined business plan that concentrates on design, manufacture, and sale of standard technical products for the communications and instrumentation markets." More specifically, Topol recounted in Dun's Review, as restated by Rickert, "I asked what products we needed for growing markets, not what markets we should go after because we had a product."
The answer to that question was telecommunications products, primarily the satellite earth station, a large mobile dish used to receive signals transmitted from communications satellites orbiting the earth. In 1973 the company displayed a portable satellite earth station at a communications trade show in California. It planned to sell the portable stations to companies in the relatively new and rapidly growing cable television field so they could transmit their programming to a large number of stations in different areas. The stations, in turn, would send the programming to consumers' homes over their cable networks. At the time, however, observers told Scientific-Atlanta executives that satellite transmission of cable television programming would take place only in the distant future.
These predictions proved incorrect and as the cable television industry boomed in the mid- to late 1970s, Scientific-Atlanta grew with it. The company's profits ballooned by 40 percent a year from 1972 on as Scientific-Atlanta came to dominate the market it had largely pioneered. In 1976, as sales rose to more than $45 million, the company greatly expanded its manufacturing, laboratory, and office space at its headquarters. It sold two-thirds of the 3,000 satellite earth stations purchased by cable companies during the 1970s, enabling its clients—broadcasters such as Home Box Office (HBO) and Showtime/The Movie Channel—to become pillars of the cable broadcasting industry. Scientific-Atlanta's strength in satellite earth stations helped to enhance its overall sales of cable television equipment, and the company also began to market other components necessary to operate a cable television system.
In addition to its satellite products for the cable industry, Scientific-Atlanta manufactured testing and measuring devices for telecommunications, industrial, and laboratory use. The company added to its instrumentation operations when it acquired the San Diego-based Spectral Dynamics Corporation, a manufacturer of scientific devices, in 1978 for $17.4 million. Spectral Dynamics brought with it European sales subsidiaries in Germany, France, England, and the Netherlands. With these additions, Scientific-Atlanta had sales network that covered 40 countries and was supported by a worldwide service network that adjusted and repaired its instruments. Both Scientific-Atlanta and Spectral Dynamics relied on continual research and development to bring new products to market, thereby enhancing market share and fostering company growth.
By the start of 1979 Scientific-Atlanta employed 2,700 people. That year the company also introduced Homesat, a subsidiary formed to market satellite equipment to homeowners who lived in areas too remote to receive adequate television reception.
In addition to its two main areas of operation—communications and instrumentation—Scientific-Atlanta entered the field of home security and energy management during the 1970s. The company marketed wireless home alarm systems and provided equipment to utilities that enabled them to monitor home energy use.
By the dawn of the 1980s, Scientific Atlanta had become the world's largest supplier of satellite earth stations.
In 2000, the company sold its satellite ground station and satellite networking businesses to Viasat.[16]
In August 2002, the company laid off 6 percent of the company's total.[17]
In February 2003, Scientific-Atlanta introduced their first Explorer HD set-top box, which is capable of displaying HDTV programming, at Best Buy stores in the Phoenix metropolitan area. It was later rolled out nationwide. In March 2004, Scientific-Atlanta launched the Explorer 8000HD, their first set-top box with both DVR and HD.
In the set-top arena, Scientific-Atlanta once enjoyed 100% market share with Time Warner Cable, Cablevision and AT&T U-verse; all three companies have since started to transition to other boxes, Cablevision using Samsung, while TWC and U-verse are split between SA/Cisco and competitor Arris (formerly Motorola). Comcast also has a split account with the two companies. Other companies that have split accounts with SA and Arris are Suddenlink Communications, Charter Communications and Cox; the two vendors also had split accounts for Adelphia before that company went under in 2006. Pace plc, who mainly competes in foreign markets, serves as a domestic rival, but on a limited scale.
On November 18, 2005, Scientific Atlanta announced that it would be purchased by Cisco Systems in a US$6.9 billion cash deal. On February 25, 2006, Cisco Systems announced that it had completed acquisition of Scientific Atlanta in a cash deal that paid $43 per share. The total cash value of the deal was roughly US$7 billion, or US$5.1 billion net of Scientific Atlanta's cash balance, and also about US$5.1 billion over their 2005 shareholders' equity. In its fiscal year 2005, Scientific Atlanta earned $1.36 per common share (diluted).
On November 21, 2015, Cisco completed sale of its Connected Devices Business Unit (CDBU) to Technicolor SA. [18] This business was comprised primarily by customer premises equipment (CPE) related hardware and software that had originated at Scientific Atlanta, including set top boxes, cable gateways / modems, CableCard devices, digital transport adapters, wireless video access points, network extenders, accessories and eleven software products related to these offerings.[19]
The company was honored at the 2008 Technology & Engineering Emmy Awards for development of interactive video on demand infrastructure and signaling, leading to large scale VOD implementations.
Related Research Articles
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