Lightening The Linksys Load

If you’re in the mood to pick up an interesting present for someone this holiday season, you may be in luck. Rumor has it that Cisco is looking to offload Linksys. Again. According to the rumors, Cisco is shopping Linksys to manufacturers of TVs for a lot less than the $500 million they paid for it a decade ago. This isn’t the first time that there have been rumors about the demise of Linksys. A year and a half ago, I even had something to say about it. My opinion of the situation hasn’t really changed from that previous blog post. What has changed is the way that Linksys has been marketed.

Cisco has known for a while that it’s fighting a losing battle in the consumer market. Cheaper vendors have been attacking them on price. Premium vendors have been offering significantly more advanced devices. It also doesn’t help that the Linksys brand itself has been murky for the past several months. Cisco has attached the Linksys name not only to the shrink wrapped boxes you find in your favorite dying big box retailer but also to many of their small business products as well. You can now buy a Linksys phone system, switches, wireless APs, and routers. Many of these products used to carry a Cisco SMB brand but were rebranded in order to give Linksys a bit more robust feel. This was probably a bad decision on Cisco’s part. No matter which piece of equipment you choose to carry the Linksys logo, most of your SMB customer base is going to have visions of trying to buy a wireless router at Best Buy. I had a very similar conversation a few years ago with D-Link. One of their reps came in to try and sell me on their enterprise line of switches. At this point I said to myself, “D-Link makes enterprise gear?!?” I was informed they were a large vendor of this type of gear. They were rather popular in Europe, according to the rep. My response? “So is David Hasselhoff.” No matter what you build with that brand, you’re still going to conjure images of your consumer brand. Linksys shares that same fate.

Cisco has made no secret that they want to start moving toward software as the core of their network offerings. When John Chambers finally retires in a couple of years, he wants to be sure that he hit his last market transition. In order to make the voyage to the Land of Software he’s going to have to shed some weight. I think Linksys is the biggest piece of that weight. After the Flip and ümi closures last year, Chambers needed some breathing room before turning the lights out in other areas. Linksys still holds enough value to fetch a fair price on the open market. Seeing as it’s being shopped to TV manufacturers this would be an excellent opportunity for a mid-market player to catch up to Samsung or Vizio in terms of network offerings. All these devices are going to need to be networked. Most of them come with wireless cards today. With 802.11ad still too far off to be of useful impact today for short-range high speed networking, manufacturers are going to need a stop-gap solution today. Likewise, Cisco has to make the decision whether or not to invest the R&D in the brand to get to those new protocols and devices. Most consumers today own an 802.11n wireless router of some kind. Those people are unlikely to buy a new device until there’s a protocol change or some kind of massive increase in throughput. And even when it does come time to make that upgrade, users are unlikely to spend the kind of money that it would take to recover the cost of development. If Cisco really wants to concentrate on software in the future, doubling down on unprofitable hardware today makes little sense.


Tom’s Take

My Cisco Valet Plus, which is really just a rebranded Linksys WRT310N, now sits on my bookshelf unused. I finally decided to move on to something that fits my usage profile better. I settled on an Apple Airport Extreme. I now have dual band radios, guest access, and a USB port for my Time Machine backups. I might have been able to get a lot of this in a Linksys device, but I grew tired of trying to figure out which one I needed. There was also a lot of feature similarity between the hardware that only seemed to be limited by firmware instead of hardware. For better or worse, I didn’t buy Linksys. Cisco is hoping that someone will buy it from them now. That buyer is going to get an entrenched consumer networking product that has some life left in it. As for Cisco, they get to rid themselves of a peculiar albatross that has weighed heavily on them as of late. Lets hope the Linksys Diet pays off.