By John Biggs
It’s been a weird decade for Cisco (NASDAQ:CSCO). After being a dot-com darling in the late 1990s (everyone wanted a few Cisco routers for their door-to-door pet food delivery services), the company tried its hand at consumer products with the Flip video camera series and, a little while later, Linksys routers. It seems, then, that Cisco's grand consumer experiment is over.
The terms of the sale are undisclosed, but it should close in March of this year. Belkin has been taking a harder look at networking hardware for the past few years while still maintaining their ties to the computer accessory market that defined the company for years. Their current crop of routers are aimed at home users so Linksys could give Belkin a bit of an edge in the home/small office market.
What's more interesting, however, is where Cisco hopes to go now that the company has divested itself of all consumer products. Consumer electronics are a horrible business. The margins are low and demand fluctuates depending on what comes out of Cupertino or Redmond. In short, there's very little incentive to sell hardware to consumers when they're fickle, hungry for Zappos-esque "You screwed up so give me free stuff" support, and rarely, if ever, upgrade their PCs and peripherals. What electronics manufacturer wants to waste his time with consumers when IT clients sign a nice contract and pay on time?
But the consumer market is leading the IT market. The story in CE these days is BYOD -- I get emails about it nearly every day. IT managers used to dropping a few thousand on fleet laptops now have to contend with people bringing in iPads, Surfaces, MacBooks, and their own mini-routers. It’s a maddening situation, to be sure.
Big iron isn't the watchword anymore. Buying a Cisco router for a small home office barely makes sense and, increasingly, it makes even less sense for a bigger office. That is not to say that IT infrastructure isn't lucrative -- it's just not as lucrative.
Belkin should be able to do good things with Linksys. Cisco clearly couldn't.