Linksys sale continues Cisco's exit from consumer market

Belkin acquires Cisco's home networking business

Belkin today announced that it would purchase Cisco's Linksys home networking business, with the deal expected to close in March. The terms of the sale have not been disclosed.

"It's clear that Cisco wants to be an enterprise/medium business vendor, so it doesn't want to play in the consumer space other than provide products and services to companies that sell to consumers like carriers and enterprises," Telsyte senior analyst Rodney Gedda said.

Cisco purchased Linksys for US$500 million in stock in early 2003. At the time Cisco cited research about the explosive growth in networking in the home and small offices. A statement issued by Cisco CEO John Chambers said the acquisition was a "solid example of Cisco's strategy to broaden its end-to-end portfolio of network solutions into high-growth markets such as wireless, voice-over-IP and storage-area networking."

At the time Linksys had a 45 per cent market share when it came to home networking and offices with 100 or fewer seats.

"When Cisco acquired, Linksys the feeling was [that] Cisco was trying to spread its wings more to expand out its market through acquisition, but it wasn't really a good fit with the rest of Cisco's business in the sense of their target customers, because Linksys was targeting consumers and small businesses whereas cisco was out there targeting enterprise and carriers," Gedda said.

Cisco's sale of Linksys follows the sale of the similarly consumer-focussed Flip digital video camera business in 2011. Cisco had purchased Flip creator Pure Digital Technologies in 2009 for US$590 million in stock. In April 2011 the company announced it would shut down its Flip business. Even then commentators were calling for Cisco to completely exit the consumer business.

A statement from Belkin indicated it intends to keep the Linksys brand. It will also honour warranties for Linksys products. The sale "will solidify [Belkin's] number 2 market share position in the ANZ retail home and small business networking market," the statement said.

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Tags NetworkingciscoLinksysbelkin

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