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As a consumer electronics company selling through traditional retail channels, Cisco was outgunned, analysts said. Vendors such as Samsung Electronics, which have long experience and established brands in that business, can fairly easily add networking to their products, said Roger Kay, an analyst at Endpoint Technologies Associates. "It's less likely that companies come out of the network and into the living room," Kay said.
Linksys now faces rivals such as Apple that are integrating Wi-Fi routers into other types of products, Kerravala of ZK Research said. For example, Apple's Time Capsule is a router and backup device in one box and is built to work with other Apple technologies such as Bonjour and AirPlay, he said. Cisco was faced with a choice between developing a competitive home ecosystem around Linksys or spinning off the company, according to Kerravala.
Most consumer electronics gear has since left the Linksys line, which is now dominated by connectivity products. At CES 2013, the division announced three Wi-Fi routers, a Wi-Fi USB adapter and a set of apps for managing home networks.
By retreating from the consumer business, Cisco is playing more in its sweet spot, which has always been supplying enabling technologies, Kerravala said. That's the essence of Cisco's business with service providers, where it makes both set-top boxes for homes and back-end infrastructure for content delivery. Cisco's big product introduction at International CES earlier this month was Videoscape Unity, a new version of its back-end software platform for video services from cable operators and other service providers.
Set-top boxes are becoming gateways to the Internet and other services in homes, and they're a platform Cisco can tune for and distribute through its service-provider partners.
Cisco also plans to keep a hand in the Linksys products, possibly making them work closely with its set-top boxes and, in turn, with service providers' networks. In the press release announcing the sale, Belkin said the two companies would develop a strategic relationship in several areas, one being products for the service-provider market. Belkin would have access to specialized Cisco software across all its product lines to create "a more seamless user experience for customers," the release said.
Cisco might get back into making consumer products and selling them at retail some day, ZK's Kerravala said. But if it did, the effort would probably look quite different the next time around.
"It's a more difficult challenge than I think they had realized at the time," Kerravala said.