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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 ;)"
Finally Cisco is going to get some strength behind their networking products!
I mean, they (seem to me to) have a virtual monopoly on the business router market, and are now seem to be trying to extend it to the consumer market.
What do you guys think of Cisco, as a corporation? I remember seeing an article on Wired years ago about how happy the employees were about working there.
Things may have changed now, though.
tmegapscm
The good news is that those who bought a Linksys access point now have a Cisco access point for 1/2 of the price ;)
The bad news is that those who buy Cisco access points in the future will have a Linksys access point for twice the price ;)
Will require me to get CTHULHU? Cisco Training: Home User, Limited Home Use?
I think Cisco should have stuck to their core business and not try to diversify. This move will only be good for those few customers that will gain a Cisco access point for 1/2 of the price right now.
In the end it will probably just help create a new MS-like giant. I've never been a fan av any kind of corporate giant.
I have no doubt that Cisco is feeling the effects on their bottom line by Linsys' low cost alternatives.. it's time to eliminate that problem...
Hey, why'd you all get quiet all of a sudden?
Uh, I have to go...
I like LinkSys products because they are functional and cheap. Ciscos products are functional, robust but not cheap. I guess Cisco is getting scared of the competition, and decided to crush them...
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.
In the short term, this will probably be quite good for both Cisco and Linksys, but after a while both entities, if they still exist as separate entities, will start to regret this move.
First of all, Cisco now has a lot more to worry about, and they've have lot to worry about lately what with their stock prices fluctuating and a slowly decreasing demand for networking hardware as more and more IT firms belly up and more of the ones who stay in business consolodating their IT servies through hosting firms and the like.
The consumer hardware market is *very* low margin. There's a reason that they call this stuff 'Commodity' hardware... including networking hardware. If Cisco has to play the commodity hardware game for long, they're going to start feeling like having a company come buy them out as well.
Second, the number of players in the networking field keeps getting fewer and fewer. This seems like a good thing for the companies-- they don't have to compete as hard or do as much R&D to stay at the top. What this means for them in the long run, however, is that they become less able to deal with business crises and the advent of new tech. Just look at the way wireless is taking off right now. If you think this technology is done by a long shot or that there aren't new companies sprining up to exploit it, you should study it a little more. Sooner or later there will be a 'powerhouse' company spring up for an aspect of networking that's troublesome for Cisco, and then they'll have problems keeping up and staying competitive if they cut back right now at all.
The next Slashdot story will be ready soon, but subscribers can beat the rush and slashdot the links early!
Doubtful. The reason behind the purchase is to gain more market in the home network business, so there's really not much incentive to raise the prices.
To increase usability, all CISCO routers will now come with a web interface accessible on the rarely used port 80. It will have a default username/password of: admin/password. In case the username/password are forgotten, CISCO tech support can use their back-up account that they have in all CISCO boxes to access the box and change the admin password. No one will be able to find out this secret account, we're kinda sure of that.
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
People have bought into Wireless. People have bought into broadband routers, and SOHO firewall appliances. The home networking market is exploding, and Cisco can no longer afford to ignore it as a means of adding to their bottom line.
Besides, who doesn't love the WET-11?
For those that would die defending it, Freedom
has a sweet taste that the protected will never know.
Call me crazy (OK, you're crazy!) but it seems to me that Cisco is getting a little more bang for their buck here then simply acquiring new market share by finally doing something that investors are conformable with. i.e. Acquisition. ;)
The biggest news here is that cisco will finally be able to enter a complete solution into the content delivery market. A company can provide online content with massive high-end cisco name brand stuff, and use the acquired linksys stuff to give them the other end of the pipeline as a complete package.
As more local telco companies are looking at providing high-speed internet access, this becomes very interesting indeed.
This tagline brought to you by 1500 monkeys in just under 17 years.
I like the Thong song as much as the next guy, but how on earth did Sisqo ever make enough to buy a consumer electronics company?
Heisenberg might have been here.
Linksys makes the best home networking equipment. I mean, just stop and forget everything you know about networking...and think about it from a n00b perspective.
You want something cheap, attractive and easy to setup and use. For those knocking Linksys quality, allow me to let you in on a little secret...they are the best. In the home networking, wireless networking business, Linksys gear rules.
Now yes, I work in wireless networking...but guess what, I don't work for Linksys or Cisco. I work for one of their competitors. Despite my strong sense of company loyalty, I'll still admit freely that Cisco equipment is the best for Corporate networks (duh) and Linksys equipment is the best for Home Networks. People with Home Networks don't care about firewalls, security, layering and routing, they just want their 3 computers online at the same time, with a high speed connection.
btw, before anyone puts words in my mouth. I tried to stress that Linksys has the best quality gear...and they do. I didn't say anything about their tech support, which is "lacking".
Craenor