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Cisco to Acquire Linksys
forged writes "The Boston Globe is reporting that networking giant Cisco Systems plans to acquire Linksys later this year for $500M, thus entering the consumer market. Linksys also has a press release. The good news is that those who bought a Linksys access point now have a Cisco access point for 1/2 of the price ;)"
Cisco:Hard to configure, very configurable.
Linksys:Easy to configure, not very configurable
That is, until Cisco raises the price on all the devices sold under its Linksys brand by oh, about 50 percent so that it doesn't compete with Cisco brand devices.
That doesn't make any sense. If Cisco raised the prices by 50%, then the Linksys stuff WOULD compete with Cisco, since they'll now be in similar price categories. How on earth is Cisco going to differentiate Linksys vs Cisco if this occurs? Makes more sense that Linksys continues to be the low price option and Cisco to be the corp. higher price option. Remember, Linksys is in the consumer market, Cisco almost exclusively in the corporate. Linksys would get killed by the Netgears and SMC's of the world with such a price hike.
Wouldn't surprise me. They recently bought Psionic as well and, as far as I can tell, handy tools like PortSentry and Logcheck are nowhere to be found anymore. Instead, PortSentry at least has been assimilated into overpriced Cisco products.
At least I still have the copies that I downloaded several months ago...
All I want is a kind word, a warm bed and unlimited power.
I would imagine that cisco wouldn't do much to change the actual linksys line. I doubt they would build on their router's OS since the whole idea in the consumer market is to have an easy to configure product. Cisco will probrably want to keep a sharp distinction between their consumer products with easy to configure web interfaces (ie the old linksys ones) and their mid to high end corporate products. I do not think that either the consumer needs to worry about products becoming hard to configure, nor do i think that corporate IT needs to worry about a decline in quality of the high end stuff. This merger is not meant to "improve" technology. Its simply meant for cisco to enter a new market. I seriously doubt anything will change pricewise. If it does it would probrably mean cheaper consumer products since cisco has much more in assets and could seem to be in a position to undercut netgear. Just think, now we can have microsoft vs cisco price wars for the home network... Soon we're going to be getting home routing equipment for free if it follow the netscape vs internet explorer model ;)
Cisco provides outstanding quality networking and communications products for the IT sector of the enterprise. However, with the dot-bomb era of the computing industry, Cisco's shares have fallen drastically as a result of companies not actually needing to acquire Cisco equipment as much as they thought. The effect on Cisco? Over-stocked inventories required price-slashing to remain competitive. Their existing market segment is slow, sustained growth. The Linksys acquisition caters to a dynamic, expanding market.
The reason I say it's the Walmart way is because Walmart provides just about everything you can think of that is smaller than a car - some of the Walmarts where I live actually have the Walmart Appliance section. Walmart sells clothing, food, tools, etc.
Most individuals looking for high quality (cost) goods will not be purchasing their designer fashions at Walmart. Instead, they choose to go to Dillards, Parisians, Eddie Bauer, and other higher quality - smaller customer base distributors. Yet, when you look at it in the end - who makes the most money (by a huge margin)? You guessed it - Walmart.
The vast majority of consumers are middle-class to lower-class individuals. Many companies that have taken a huge beating in the market place are looking for cost cutting measures. 40 Linksys switches or 10 Cisco switches for the same cost? The "Linksys line by Cisco" would be like the "Great Value" Walmart brand. The Cisco native branded equipment, I would imagine, would be for the people who still want to shop at Eddie Bauer, etc.
Linksys is a highly popular choice for cable companies who provide their broadband service because it's extraordinarily cheap with a pretty decent track record. Cisco acquires not only Linksys, but its existing relationship with all of the companies who buy Linksys equipment in bulk. As a result, Cisco gains market share into an arena it previously untapped venture without having to invest the capital to pursue moving into an already crowded arena.
I would imagine the Linksys brand name would stay around for quite a while (much like the legacy of USRobotics when purchased by 3Com) to diversify the two segments of the company for marketing purposes.
The only caveat to this acquisition is the fact that it was a purchase of another company. Many companies which made acquisitions before the dot-bomb crash did not efficiently integrate the companies, and they ended up either being dead-weights or misused to the point of extinction. Only time will tell.
Ayup