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Cisco tests out home electronics market

Posted Dec 29 2008, 01:45 PM by Kim Peterson
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Cisco Systems, whose shares are down 40% this year, is jumping into the consumer electronics business at the worst possible time. Or is it the best possible time?

The company's going to announce a new digital stereo system and other consumer products in January. Not the best environment for a splashy product launch: Consumer electronics companies are seeing a glut in inventory and are temporarily shutting down factories until sales pick up again.

But Cisco isn't aiming for the short term. The company has big visions of connecting its products to networks inside and outside the home. People having video chats with their relatives using Web cameras and high-def TVs.

People are buying more stereos, TVs and other devices that run on high-speed networks. And Cisco is a leading maker of the tools, like routers and switches, that handle those network connections. It owns the Linksys line, for example.

So it makes sense that Cisco would want to get out from behind the scenes. It could make the router for the home network and the devices that work on that network. But other electronics makers have tried, without much success, to get into the device business. Dell and Intel have plenty of war stories about their efforts. 

Cisco's not going to have an easy time. But if it wants to venture into these waters, why not start now? Other competitors, with the exception of Apple, are laying low and waiting for the economy to recover. Better to develop those retail and production channels now.

Investors didn't seem too thrilled with Cisco's news. The stock is down nearly 3% today to $15.81.

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Comments

 

If they produce a quality product that's made in the USA..i'm shure it will work out fine.

If Cisco wants to hit a home run they should take a closer look at the home office market. Their VOIP solution for remote office connection has missed a large market by not providing a home/remote router solution to allow easy access. VoIP services at the employee's remote location are possible with Cisco Unified IP Phones and the Cisco 800 Series router if you are smart enough to configure it. My company invested in 50 of these routers to discover the setup was too complicated for not only the average user but even our company techs. A simple router that allowed POE and a VPN solution to connect to the main office with out all the license fees for VOIP would be great.

Cisco hasn't made the Linksys platform really feel at home yet... So it would be nice to see if this consumer arm would work out better.

I work with Cisco products everyday and Cisco is considered to be top of the line equipment in the IT industry. Most if not all of the top companies in the United States use Cisco routers and switches in the IT department in some capacity.

Cisco products are so durable I would not be surprised that the company loses money due to not having to buy replacement products on a two year turn around.

If Cisco is entering the home market it will not be long before people realize that they are getting all of their monies worth from the Cisco product they purchased.

This will be a great investment for Cisco in my opinion and will only increase the bottom line of a company already flush with a positive cash flow.

Cisco missed the boat when they didn't buy Advent Networks. Their loss.

If they were REALLY smart, they'd forget Digital and get back into Old School. Digital audio components are dima-a-dozen. Get back into audiophile grade record players, cassette, and reel to reel decks. There are of course naysayers who feel that such analog audio is passé. But a few minutes spent on specialty websites such as http://www.tapeheads.net shows that there is still a vast albeit underground demand for these devices. Vinyl is already a huge hit with todays 16-20 crowd. Tape will be right behind it.

I also work with their products daily, from the 300K chassis units all the way down to $250.00 phones. They manufacture a quality product and can provide top notch support, but at a price. Cisco makes its money by charging licensing fees upon licensing fees upon support fees, and home users aren't used to paying 299.00 for an item, then having to pay twice as much for a license and 20% of that every year for support.

I don't question their intentions or ability to build great stuff, but they have tried direct products (a router line and a switch line) before and it was a disaster.

For a company that makes the majority of its money from support and licensing advanced features, this will be very difficult to transition to a cost competative model

If Cisco, or any other tech oriented company, wants to make a huge splash they should be working on home video conferencing. I suspect there would be a huge consumer base willing and able to pay for a system that is similar to what's already available to the Corporate sector, assuminng it's not price prohibited. I am not a "tech" person, but I think this could be the next "killer app".

Everybody wants that crystal clear video phone on thier HD TV's lilke you see in the movies with "Cisco"  splased about.  But, it's gotta be AFFORDABLE to the common family.

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Joyce

www.videophonesguide.com

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