Cisco picked up popular router manufacturer Linksys a few years back for about $500 million dollars. The consumer networking space is a somewhat low-margin, high-volume business, though, and with the economic downturn, people are only replacing their routers as needed instead of upgrading to the latest standards as they come out, so it’s turned out to be not as profitable a procurement as Cisco might have envisioned.
So it’s no real shock to see Cisco divesting itself of its consumer products and returning to a business-to-business, enterprise-based provider, an arena in which by all accounts the company excels.
To facilitate the sale of their consumer products, Cisco is working with Barclays, the sale adviser who is also working with Google to divest itself of Motorola’s cable division. Cable boxes are likely to be a shrinking market as more and more companies move toward app-based decoders, and with the same company handling all these sales, a good choice might be to merge them. Combining the cable know-how with the networking and consumer savvy that Linksys brings to the table might enable the development of a consumer catch-all box that can plug into the new IP-based Cable delivery systems with ease. It’ll definitely be interesting to see how the whole thing pans out.