Cisco Says it Is Now a Consumer Company

Cisco (CSCO) has decided to be a player in the consumer electronics business.

Cisco is a company that tends to be associated with enterprise networking; at their heart it remains a manufacturer of big honking routers. But over the last few years, the company has a concerted effort to get into the consumer business, largely through its acquisitions of Linksys, which makes home networking gear, and Scientific Atlanta, manufacturer of cable set-top boxes.

At the Consumer Electronics Show in Las Vegas Wednesday, Cisco made a set of announcements that extend their consumer ambitious considerably.

In an interview with Tech Trader Daily Wednesday morning ahead of the company’s press conference later today, Ned Hooper, SVP of corporate development and the consumer group at Cisco, and Dan Scheinman, SVP and general manager of the Cisco Media Solutions Group, laid out a series of four key initiatives.

• The company is launching the Home Networking Architecture Protocol, or HNAP, which is a new open standard designed to improve home networking. The standard is based on work conducted at a small company Cisco acquired called Pure Networks. The idea is to make it easy to connect consumer electronic devices to each other and to the Web. Cisco’s goal is to make HNAP a wide-spread standard in CE devices. It’s going to take some time, and co-operation from the CE companies; this is not the only attempt to do this, either. The company is not announcing any CE backers for the standard at the show.
• Cisco is also announced a service of Media Hubs under the Linksys by Cisco brand. The hubs are available today, at prices ranging from $299 to $399; the devices will have between 500 GB and 1 TB of storage. The hubs centralize consumer media assets - photos, songs, videos - and made them accessible throughout the home as well as outside the home over the net. The idea, he says, is to open and free content from the devices on which it sits. The hubs copy digital files from any PCs on your home network and put it all in a centralized place.
• Cisco is also entering the wireless home audio system market, with systems ranging in price from $299-$999. The home audio systems can be built on top of the Media Hub, or simply pull music from any PCs on the network. The idea is to let consumers listen to their music in any room in the house; you can have the same music in multiple rooms, or different streams in different rooms. In addition to playing your own music content, the Cisco audio gear will also play music from the Real Networks (RNWK) Rhapsody service from the Web.
• In what may actually be the most aggressive move, the company is launching Cisco Eos, a hosted software platform to allow media companies to build social networking focused Web sites. Warner Music today launched sites on the EOS platform for two artists - Laura Izibor and Sean Paul - with more on the way. The revenue model here is the charge a modest fee for the hosted services, but with the bulk of the return to come from a revenue share from advertising. Schienman wouldn’t put a figure on just how big he thinks the market for the Eos platform might be, but he did say that the business “can be relevant to the company,” which for Cisco would be no small number.

While the individual elements of the Cisco announcements are interesting, the larger trend - Cisco making a harder play for consumer wallets - is the story investors will want to keep an eye on in the months ahead.

CSCO Wednesday closed down 47 cents, or 2.6%, to $17.32.