Reading the Tea Leaves: Should Linksys Go Away?

The ongoing debate has resurfaced again. Uberpulse.com has published a video of John Chambers telling European press that “It will all come over time into a Cisco brand. The reason we kept the Linksys brand is because it was better known in the U.S. than even Cisco was for the consumer. As you go globally there’s very little advantage in that.”

Does that mean the Linksys brand is definitely going away? Frankly, I’m not sure how to interpret the Chambers comment. I don’t know that it necessarily rules out the sub-branding strategy they’ve been talking about for months. On the other hand, Linksys is already being marketed as a sub-brand, and his statement clearly suggests he wants to do something else. The part about Linksys being stronger than Cisco’s brand – even among consumers -- I definitely can’t buy. Cisco seems like it’s fully penetrated the public awareness, even among civilians who can’t really explain what the company does. Internet stuff, right?

But that’s beside the point. The real question is, should the Linksys brand be dropped outright, since it’s clear that Cisco is driving the bus anyway? Gun to the head, yes or no? I’m going to predict yes, but it will be a long, indirect path that will leave the Linksys brand in place for a long time to come, and likely be second-guessed after the fact.

First there’s the huge difference in gross margins. By virtue of its low-end target market, the Linksys product lines will never be as profitable as the mainline Cisco offerings. So I believe management likes the ability to break-out those product lines in some expedient way, just in case the blended gross margins should ever truly threaten the stock price of The Mother Ship.

Secondly, channel partners like the idea of carrying a second brand. It’s basically the don’t-put-all-your-eggs-in-one-basket kind of wisdom combined with the desire to project at least an aura of vendor independence. Linksys did some research that said a large chunk of their channel carries a second brand, but there’s only a 5-7% overlap with Cisco. Obviously, they’re going to want that number to be a lot higher so they can better influence the routes-to-market, and dumping the Linksys brand won’t necessarily bring those partners into the fold. So Linksys will stay.

But over time, the Cisco and Linksys business functions will become increasingly intertwined. Expense control will pretty much dictate that the structures become unified. Somewhere along the line there will be a revenue hiccup and the budget knives will come out. Somebody will have the bright idea, “Why are we spending money on promoting a second brand? Besides, haven’t we been saying it’s all essentially one network? Let’s drink our KoolAid.” To many it will seem like the next logical step. So Linksys will go.

Next, they’ll regret that. Because while the singular “human network” makes good sense from a perception and interoperability standpoint, it has very little to do with how products are sold and supported. Keeping my small business network running and keeping a large enterprise running require two very different levels of expertise, and the march of technology won’t change that.

The Linksys channel program is a slimmed-down version of the Cisco one, which has certifications, specializations, front-end discounts, back-end rebates, and a host of special programs and components designed to meet the needs of a wide range of customers and keep an even wider variety of channel partners on-board. Unifying the two structures won’t make matters less complicated – and it will be especially tough on the SMB partners. In the end, killing the Linksys brand will necessitate a level of Cisco product segmentation that the Linksys brand accomplishes in a much less distracting way. So while dropping the name might seem more efficient from a branding point of view, the move will cause substantial collateral damage to the go-to-market strategy.

Time will tell. Aside from the conjecture of a lot of people, (including my own), no one really knows how the Cisco/Linksys brand question will be resolved. I don’t even think Cisco has the course charted yet. But the decision is a big one, and will have far-reaching effects to the company’s SMB initiative.

• Cisco
• channels
• Cisco
• Linksys