Is Cisco Going to Compete with Apple in the Living Room?

Cisco’s (CSCL) acquisition of Pure Digital, maker of the Flip camcorder, has sparked a lot of discussion about the networking giant’s intentions. One theory is that Cisco is looking to compete with Apple (AAPL)—especially in the digital living room.

Ben Worthen at the Wall Street Journal surmises:

It isn’t a big leap to see Cisco developing a home-media hub that cobbles these pieces together—some sort of device that allows people to upload and watch videos and listen to music throughout their homes. In fact, it looks like a next logical step. Apple has a similar device called Apple TV, which can direct music to a home audio system and videos to a television. It works with Apple’s iTunes store, naturally.

All of that is true. As noted Thursday Cisco has a lot of living room parts. The cable box (Scientific Atlanta), the router (Linksys), software to bring video conferencing to the home and now the Flip camcorder.

Worthen connects a few dots and notes that the folks that make the Flip have proven they can create the right gadget at the right time. On that topic definitely read Michael Arrington’s history lesson on Pure Digital and how it arrived at the Flip.

While this digital living room scrum is noteworthy—and pretty damn interesting—let’s not lose sight of Cicso’s big goal. Sell the big honking networking gear that will move all of this video around. Cisco really doesn’t care where the video comes from as long as enterprises and consumers move a lot of it over a network increasingly powered by the networking giant’s hardware and software.

The only thing Apple and Cisco have in common is that they want to sell you a ton of hardware. Apple sells the fashion statements and Cisco sells most of the stuff you never see in the network, data center and telecom provider. Every once in a while Cisco puts on a nice front end—Telepresence and Flip camcorders—to entice you to use more bandwidth for video.

The living room is only part of the equation for Cisco. In fact, it’s only part of the equation for Apple. Both merely see it as an avenue to sell you more hardware. Both companies are pursuing different halo effects.

Here’s a visual aid I cooked up to explain Cisco’s grand plan (all roads lead to the router, switches and the fancy new servers). Click to expand:

Comments

[e1618978:]

Have you ever tried one of Scientifica Atlantica's cable boxes? Cisco has no chance against Apple, their consumer products are horrible.

Mar 22 02:27 AM

[Zoltan L. K...:]

Apple and Cisco are also potential partners and they really have almost no overlap in their businesses. It is not only about hardware for both companies but about reliability and ease of use. They have totally different customer bases and lots of room for cooperation.

Mar 22 06:20 AM

[Kontra:]

Is this a joke?
If you still remember the Cisco iPhone, this should pretty much clear up Cisco's chances against Apple:

What’s in a name: The other iPhone(s)
counternotions.com/200.../

Mar 22 07:00 AM

[tywiz:]

Just for the record the Cisco iPhone came with an acquisition, it wasn't a product they built. The Cisco media hub show good potential and is going for open standard.

Mar 22 10:33 AM

[mollytjm:]

Cisco can try to compete... but they better have a lot of money and innovation to throw into the game..and seamless products, which is what Apple has taught people to expect..i'm not sure other companies can do this.

Mar 22 10:43 AM

[Murphy Mac:]

I find it surprising that there's been so little talk of Cisco buying Yahoo - not that I think they'd actually do it. But it would give Cisco instant access to a large number of consumers.

Cisco would be at the top my list of companies that could cull some sense out of Yahoo. Maybe some cents too.

Mar 22 01:50 PM

[techseer:]

Apple's not in the same league as Cisco in terms of revenue and market dominance (oh, except for a little music player, sorry). Cisco could crush Apple in anything if it wanted to.

On Mar 22 07:00 AM Kontra wrote:

> Is this a joke?
> If you still remember the Cisco iPhone, this should pretty much clear
> up Cisco's chances against Apple:
>
> What’s in a name: The other iPhone(s)
> counternotions.com/200.../

Mar 22 02:41 PM

[NoComment:]

2 great companies. Partnering or competing, both are good for the world. And in either mode, if they can relieve or dependence on Microsoft, it'll be better than relieveing our dependence on foreign oil.

Mar 22 03:59 PM

[loquitur:]

On Mar 22 02:41 PM techseer wrote:

> Apple's not in the same league as Cisco in terms of revenue

From Yahoo Finance estimates:

CSCO current year (35.7B) next year (34.6B)
AAPL current year (35.1B) next year (40.1B)

Mar 22 05:24 PM

[e1618978:]

Apple's wireless hub is also much better than Linksys boxes - I owned a number of unreliable Linksys boxes before getting a (much better) Airport extreme.

Mar 22 07:38 PM

[GSlusher:]

Interesting, as they are almost the same size in market cap. Cisco is 92.87B, Apple 90.31B. Revenue means essentially nothing. A company can have huge revenue but be losing money rapidly.

On Mar 22 02:41 PM techseer wrote:

> Apple's not in the same league as Cisco in terms of revenue and market
> dominance (oh, except for a little music player, sorry). Cisco could
> crush Apple in anything if it wanted to.

Mar 22 08:50 PM

[flint:]

@techseer.... that is deliberate irony..yes??

"Apple's not in the same league as Cisco in terms of revenue and market dominance (oh, except for a little music player, sorry). Cisco could crush Apple in anything if it wanted to"

*Sigh*

Ok you got called on the first sentence. Now I'll call you on the second. Just what has Cisco got either intellectually or product wise which could in any way compete with Apple's products??

Of course everyone I know wants $50,000 switchgear to enhance their consumer experience....

Mar 23 07:08 AM

[MortyThe:]

Copy both the *Sigh* and "2 great companies"... As a long time & experienced Apple fanboy (way back to 1987 and my first Mac Plus), via working for Apple, and then spending 12 fantastic years with Cisco from 1996 to 2008, I would say the world is a better place with both companies inventing, innovating and competing for the better part of my digital experience, and my wallet. Apple is unique in terms of the direct user experience of its products and services, while I still place significant trust in "Cisco Powered" network of my service provider.

Mar 23 06:19 PM