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Monday, December 13, 2010

Will Cisco (Nasdaq:CSCO) benefit from Migration to IPv6?

Although the Internet is largely run from IPv4, that is starting to change, and Cisco (Nasdaq:CSCO) is prepared to benefit from the change in protocols if the private sector started moving toward IPv6, which the U.S. government will do by the end of September 2012.

The hopes of Cisco are the private sector will digest the move of the government toward IPv6, and they'll start to migrate to that en masse, which would give Cisco a major boost.

The difference between IPv4 and IPv6 is IPv4 usese 32-bit addresses and IPv6 uses 128-bit addresses. IPv4 can only support about 4.3 billion devices connected to the Internet, while IPv6 can support virtually unlimited numbers. At this time about 94 percent of IPv4 addresses possible have been allocated, making the eventual move to IPv6 a necessity.

What will happen will be hybridization for some time, as both will operate while the transition is being made. That means devices able to handle both protocols will have to be developed in the near future.

Being one of the leaders in IPv6, Cisco could take advantage of the change in several product categories, including switches and routers. With enterprise routers that could enlarge the market share Cisco holds.

Cisco should also benefit from Japan, Germany, Brazil and France moving quickly into IPv6. Together it should at least help Cisco maintain their current market share, and in some products extend it.

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