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Adding digital signage to its portfolio of digital media products, Cisco Systems has announced plans to acquire Tivella.

The acquisition will enable Cisco to extend its digital media system, launched in September, to work with plasma and LCD televisions and other displays not attached to PCs. Cisco’s initial digital media system product enables video on the desktop for applications such as corporate communications, e-learning and marketing to end users.

The deal gives Cisco access to the digital signage markets in retail, financial services and other vertical markets.

Cisco will bundle its digital media system together with Tivella’s media player, according to Thomas Wyatt, general manager of the Digital Media Management business unit at San Jose, Calif.-based Cisco. Wyatt declined to offer further details about the product plans, except to say the vendor intends to ship product in the early part of next year.

The Tivella media player was among the new digital signage technologies that Cisco Chairman and CEO John Chambers demonstrated during his keynote address at the C-Scape Global Forum analyst conference in San Jose in mid-December. Wyatt said Tivella is a longtime partner of Cisco.

Tivella’s technology gives Cisco an entry into digital signage, a market that the networking giant’s internal estimates place at $2.5 billion worldwide in 2011. Together with its digital media system, Cisco believes the opportunity is worth more than $3 billion.

“Digital signage is about reaching customers with relevant information such as advertising and communications,” Wyatt said. “Especially in retail a lot of marketers are beginning to shift money more to in-the-store as opposed to other forms of advertising.”

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Wyatt said that the United States has been behind Europe and Asia in adoption of these technologies, but now retailers such as Wal-Mart, Virgin Records and Cingular are using digital signage technologies.

“You are starting to see it grow more ubiquitous,” he said.

The 5-year-old Tivella already counts Bloomberg, Kroger and Alltel Wireless among its customers.

The Tivella media player, called Piccolo, weighs less than a pound and is about the size of a thick paperback book. It sits between the network and the non-PC display.

The deal is expected to close in Q2. Cisco did not disclose the terms of the acquisition. The 10-employee Tivella with primary operations in Milpitas, Calif., close to Cisco’s headquarters, will be moved into the networking giant’s facilities.

“We think that retail will be a key market for digital video overall,” Wyatt said. “Now we can reach people beyond the desktop.”