Cisco (Nasdaq: CSCO) announced today that it had signed an agreement to purchase P-Cube, an Israeli start-up based in Herzliya with administrative offices in Sunnyvale, CA.  P-Cube develops IP service control platforms geared towards assisting service providers to "identify subscribers, classify applications, improve service performance and charge for multiple IP services without costly infrastructure updates", according to a Globes article.

Looks like Light Reading's crystal bowl is working wonders these days... Back on July19, the respected publication and think-tank had printed its newest "Top 10 Private Companies List" and P-Cube had made it as #10.  Incidentally, that was just because 12 days after that list went live, their previous #10 pick, Telica (a softswitch vendor), had been bought by Lucent (NYSE: LU).  Well, now it's time for Light Reading's editorial team to do yet another refresh.

So what's the big deal about P-Cube?  Well, simply put, the company has a pretty ingenious engine that can monitor traffic at Layer 7 (that's the application layer, according to the OSI model).  This allows P-Cube to distinguish and identify traffic patterns in ways that traditional routers simply are not able to.  The key benefit is to empower service providers to monitor their service levels and to conform to SLAs (Service Level Agreements) by detecing network problems more rapidly.  The P-Cube solution enables operators to monitor bandwidth hogs that use P2P sharing apps, and either charge those users extra, limit the bandwidth of those connections, or simply drop them altogether.  No wonder the company caught the eye of service providers such as Bell South, 3 Italy (Hutchison) and Pelephone (Israeli wireless operator).

This acquisition means that a potential "killer app" can soon be incorporated into a wide range of products in the Cisco portfolio, from mid-range routers up to the core.  Cisco plans on continuing to sell P-Cube's appliances until it starts absorbing the technology in its product line, which might take about a year.