Cisco in the home: Anonymous or poised for domination?

Larry Hettick, a principal analyst at Current Analysis, and co-author of Network World's Convergence and VoIP newsletter, spent some time with Cisco at the recent Consumer Electronics Show where the networking giant detailed its desire to push further into the home networking space. Could Cisco dominate the consumer space as it has the enterprise space? Read on for Larry's analysis.

I’ve been following Cisco as an industry analyst for nearly a decade covering the enterprise space, but I must confess that for the last two years, I’ve also focused on its moves in the consumer market with interest. Cisco’s path to influence in the digital home has been both deliberate and well-considered, and following some product announcements and some face-time with Cisco execs at the recent Consumer Electronics Show, I now believe the company is poised for even more opportunities in the home networking market.

Historically, Cisco put its toe in the consumer market with the acquisition of Linksys in 2003, followed by its Scientific Atlanta acquisition in 2006. The Linksys buy seemed almost a natural extension of Cisco’s router business, given the wireless router market share Linksys had both in the small enterprise and home networks.  Scientific Atlanta offered Cisco a solid customer base for extending its value to the cable operators both with ongoing sales of set top boxes and core video infrastructure. Both acquisitions were larger than most targeted by Cisco, but each had a profitable business model, large market share, and bright future for success. 

Serious about the home networking business

However, it was really Cisco’s July 2008 acquisition of Pure Networks that convinced me Cisco was serious about entering the home networking business in a big way – even though at only $120 million, the Pure acquisition was small Cisco compared to what Cisco paid for Linksys and Scientific Atlanta.  Pure’s solution allows users to set up and manage a home network and connect a range of devices, multimedia applications and services within a home easily. Cisco’s July 2008 rollout of Linksys by Cisco Simultaneous Dual-N Band Wireless Router better helps consumers connect and manage their available bandwidth efficiently over multiple broadband devices.

Because digital home networks are complex to manage, consumers increasingly need the easy-to-use networking management tools like those offered by the Pure Networks. Service providers that deploy Cisco home networking equipment like Linksys routers and Cisco set top boxes (STBs) will also benefit with added capability to manage home networking as Cisco extends the software and management tools across its portfolio. 

At CES, Cisco also launched two home networking devices that added to my conviction about its consumer market intentions: the Linksys by Cisco Wireless Home Audio system and the Linksys by Cisco Media Hub. Both new devices are enhanced when supplemented with the dual band N-series router and the management tools acquired from Pure Networks. The Media Hub network-attached storage (NAS) devices, once again leverage Cisco’s expertise in network management, while the Wireless Home Audio System is another good step to make the consumer’s home networking experience. 

Having pointed out the good with the devices announced at CES, I am also compelled to point out what they don't have: neither is the cheapest solution on the market, and the video support both for online streaming, stored-video library management, and connectivity to existing television or in-home video systems are far from finished.  However, the underpinning both for the Media Hub and the Audio System could both evolve to better support the streaming, management, and distribution of video in the future. 

Challenges

Cisco also faces a big challenge if it wants to establish the same kind of brand-name credibility in the consumer space that it enjoys in the enterprise market—an important factor if it wants to become the “go-to” choice for what it seems to seek as a stake in the consumer marketplace.  For example, most consumers would more easily identify Apple or even AT&T over Cisco as better known partners to make home networking easier. Cisco will need to not only invest some marketing resource to establish itself, it will also need to execute well on every product it introduces in the consumer space to overcome its relative anonymity. 

Cisco has not yet disclosed to my satisfaction how it will integrate the products and features from Pure, Linksys, and Scientific Atlanta (now known as Cisco Service Provider Video Technology Group or SPVTG). Nor has Cisco yet disclosed what role, if any, the service providers will play as channel partners or suppliers of Cisco’s consumer products and enhanced home networking capabilities.  But I also note, as I have frequently done in my Network World Convergence and VoIP newsletter, that communications technology innovation occurs on premises-based devices long before the same features appear in a hosted or carrier-managed service. So I believe that, much like we found an IP-PBX on the customer premise before carriers even dreamed of hosting IP telephony the Cisco model of making home networking easier will eventually find its way into the service providers’ portfolios. 

In summary, Cisco seems to be making an elaborate multi-course meal out of making home networking easier.  But while we know some of the ingredients include a cup of broadband wireless routers, three parts of home and network-based video components, a sprinkle of audio and a teaspoon of network management software, we’re still not quite sure what the final meal will become.  But if Cisco can use the same lessons and experience it has gained in enterprise networking, it may indeed become the dominant player in consumer home networking.  

More Cisco at CES:

Cisco launches wireless multi-room audio system, digital media NAS

Is Cisco's price-point too high for its wireless multiroom music system?

Cisco: Consumer business to be worth $10 billion in 5 years

Can Cisco compete in the consumer electronics mass-market?

Cisco to introduce home stereo, video gear at CES

Cisco ain't got the skills to make it in the consumer market

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