Cisco announced plans to buy Pure Networks, a company that has developed software aimed at making home networking easier, for $120 million. (Watch a slideshow of the hottest mergers and acquisitions of 2008.)

Pure's software helps users set up and manage networks. It can be used to connect PCs, Macintosh computers, printers and other devices that users might have in their homes or small offices. The software also helps users manage security on the network and identify where problems might be occurring.

Cisco currently uses software from Pure in its Linksys Easy Link Advisor, a product that helps Cisco customers set up their home networks.

The network giant said the industry is moving from one where home networking involves sharing a broadband connection among PCs and peripherals to one that connects multiple networks, applications and services. Cisco expects to build on Pure's software, adding new capabilities to it.

Many consumer electronics developers and network companies have talked about a vision for connecting a wide variety of devices in the home -- such as TVs, computers and even the refrigerator -- via networks, but so far, that vision has been slow to come to fruition, mainly due to incompatible technologies and complexity.

Cisco expects the deal to close in the first quarter of its 2009 fiscal year. It plans to retain Pure's employees, including a research and development team, who will work under Cisco's Linksys division. The acquisition includes Pure intellectual property.

The IDG News Service is a Network World affiliate.