Cisco Linksys' revenue challenged by slow shift to 802.11n, multimedia-enabled homes

Barron's Tech Trader Daily
Barron's Eric Savitz blogged that the home networking market of Cisco Linksys has been flat to slightly down for the last four quarters, tumbling 5% in revenue year over year in the most recent Cisco 2nd Quarter.

Ned Hooper
Ned Hooper - Cisco Senior Vice President for Corporate Business Development, cites two key transitions that are affecting Linksys. The first transition is the shift from 802.11g routers to 802.11n. "The transition has taken longer to materialize than we expected," he says. Ned says the switchover should pick up steam as more PC manufacturers pre-install 802.11n into their laptops and printers.

The second transition is a move from networked home offices to multimedia-enabled homes. Ned notes that 40%-60% of homes with broadband do not have wireless networks - they are connected to single PCs. He thinks demand will pick up as more people attempt to network multiple PCs, game consoles, music players and other devices. Ned notes that the 802.11n standard is key, since it is fast enough to rout video content around the house.

Interesting points learned from the 2nd quarter Cisco earnings conference call:

First time Cisco missed January forecast in five years.
Service provider down 6% in Europe in Q2.
Enterprise was solid; orders up 11% year over year.
Commercial market orders up 20%.
60% of business outside the U.S.
Europe orders up 8%.
U.S. orders up 12%.
Asia Pacific order growth up 23%.
Emerging markets grew 24% in orders.
Services revenue 16% of total revenue; grew 18% year over year.
13 of top 20 products had growth in Q2 of 15% or better.
10 product families with orders, revenue above $1 billion.
Switching grew 11%.
Routing grew 18% revenue year over year.
Advanced Technology grew 25%.
High-end routing very strong; CRS-1 up 60% year over year.
Unified communications, including WebEx, grew 60% year over year.
View the entire 2nd quarter Cisco earnings conference call transcript

What do YOU think Ned Hooper omitted regarding the weakness experienced by Cisco Linksys in the home networking market?

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