I can’t say that I was surprised when I read the news this morning. Bloomberg late yesterday reported that Cisco has hired Barclays Plc to find a buyer for its Linksys consumer networking division.
If the deal is done sometime next year, that would make 10 years that it took for Cisco to finally figure out that it didn’t really want to be in a low-margin business that put it face-to-face with pesky, clueless consumers.
Not that Cisco didn’t give NETGEAR, D-Link et al. a run for the money. Cisco’s deep pockets were able to buy their way onto any store shelf they wanted. Hell, you could even buy bubble-packed Linkys hanging (I imagined in shame) blister-packed at your local Walmart.
Not that Cisco didn’t try different approaches. Remember the short-lived Valet line, aimed at "the average consumer"? It even came in female-friendly pale blue to enhance its WAF. Along with Valet also came the launch of the E series routers positioned for "tech experts and enthusiasts".
I even thought Cisco had a jump on the industry with its cloud-connected EA line. But a botched launch and small, unchanging set of uninteresting apps probably finally convinced Chambers and Co. that it was time to stick a fork in Linksys.
When my long time Linksys contact, Karen Sohl, went MIA a few months back and an outside firm was brought in to handle PR and reviews, I was pretty sure the end of days was in sight. Then I read that Chambers had announced “the days of boxes are over” and that Cisco was pulling an IBM to refocus the company on software and services. I should have written this piece that day.
Don’t expect Linksys clearance sales just yet, however. We still have to see where the brand name and intellectual property end up. Most of the value in Cisco’s $500M investment in Linksys is in the former, though. The scrappiness, chutzpah and product ideas that Victor and Janie Tsao used to create what became the consumer networking business is long gone. There really is no technology to sell.
Networking technology today comes from chipset manufacturers like Broadcom, Marvell and QCA. And the real product knowledge lies with Taiwanese OEMs and ODMs. The networking companies we all know are mainly marketing and distribution entities, skinning the technology and spinning the marketing messages.
Business is tough and low-margin businesses are even tougher. In the end, Cisco was never equipped to duke it out with its leaner and meaner competition. It just took them 10 years to figure that out.