Cisco tests out home electronics market
Posted
Dec 29 2008, 01:45 PM
by
Kim Peterson
Rating:
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.
Related reading:
Inline skating for Cisco
Cisco tries to reinvent itself
Cisco bouncing back from 'silly' valuation
Tech companies force workers into paid time off
