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 (NASDAQ: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: