Should Cisco Stay Out of the Living Room?
As Cisco Systems gears up to launch a range of consumer electronics for the home, some industry pundits think the networking giant’s consumer focus will fail miserably. GigaOm calls it a “misguided foray into the living room.” On the contrary, The VAR Guy thinks Cisco would be foolish to ignore consumers. Here’s why.
Fact is, consumers — rather than corporations — increasingly drive the future of IT. And a growing list of “corporate” IT solutions (such as TelePresence) leverage PC economics, which means their prices fall by half every 12 to 18 months.
Cisco can either embrace consumer IT, or get destroyed by it. Consider the following:
- TelePresence — a.k.a. next-generation video conferencing — is coming to the living room. And VARs increasingly target consumer-based IT services, notes the OnForce Services Marketplace Index, which tracks IT engagements across the United States.
- Sure, Cisco spent a hefty $500 million on Linksys. But can you think of a stronger home and small business network product line? GigaOm accurately notes Cisco’s addiction to fat enterprise product margins. But Linksys has taught Cisco quite a lot about consumer pricing, thin margins, retail shelf space and discount bins.
- Digital media — movies, music and whatever’s next — requires hefty bandwidth. If Cisco helps home users consume more bandwidth, service providers will be forced to upgrade their infrastructure. Anybody else see a clear bandwidth connection between Cisco’s consumer end-point strategy and Cisco’s enterprise-class router (the ASR 9000)?
Will Cisco’s consumer strategy succeed? It’s far too early to say. But ignoring consumers — the folks who are driving the future of IT — would be foolish.