Can Cisco Become a Consumer Electronics Company?

To Cisco’s competitors and there are many, the company is a monster. Almost impossible to compete with on a level playing field. In the past I have mentioned how the way Chambers and company acquires and integrates new companies into the fold is better than just about any other company and only Oracle is as talented.

Om Malik does point out a severe weakness the company has… Its inability to compete in the consumer electronics business in a serious way.

Here is my favorite part of his post:

How does a company that gets big fat margins from selling expensive equipment (and paying its sales team accordingly) live with the razor-thin margins of consumer entertainment gear? For Cisco this would like climbing Mount Everest without an oxygen tank.

Om says Cisco is best served by joining forces with another company in a partnership allowing the companies to more easily move media around the home. What value Cisco adds to this equation though is unknown.

In the corporate world you don’t get fired for buying Cisco but at home, the rules are very different and strong CE companies already have the relationships and access to shelf space.

Still the company will continue to try and if it gets it right there are certainly huge financial gains to be made. Sure the margins are lower but if you can build a strong consumer brand, you are able to extend your product line into multiple areas quite rapidly.

  • John
    January 20, 2009 at 12:38 am

    Cisco Systems can obviously be a consumer player in this market. I believe They have the resources to do so right. If they do lack anything they’re not shy about acquiring it; they are one of the best at that. However, there is a bigger question out there, and that is, can Cisco change the mindset of consumers towards their offerings?
    At CES, Cisco unveiled a wireless home audio product line that can play music throughout a person’s home or small office over an existing 802.11n WiFi network.
    When people want to buy a small home or office audio system they usually choose Bose because of its quality speaker system. True, Bose does not offer a wireless system, but they do have wireless offerings as accessories.That is what Cisco is up against. A consumer can simply purchase a Bose Wave Music System for $800 and start listening to music from quality speakers in an instant.
    The Linksys by Cisco Wireless Home Audio system will consist of half a dozen components highlighted by the mini-boom box (Conductor – great name btw).The Conductor gets music from a CD player, PC, Web services and another Linksys product called the Cisco Media Hub, which is a NAS over an 802.11n network.
    But there is more: Cisco is also offering a 50 watt-per-channel integrated amp called Director, a stereo speaker kit, an iPod docking station, IR remotes, an LCD player and Controller.
    John Chambers, Cisco’s CEO, said that he wants to be aggressive in the CE space with an architectural play. He also said during a Web video at that he wants Cisco to change the minds of consumers.Chambers has made plenty of bets that have paid off handsomely for the company.
    And he’s bang on with his assumption that Cisco has to change the minds of consumers for this newly launched consumer play to be successful. Let’s not forget that Bose has a great brand for its market. This is a market that does not necessarily know the Cisco brand all too well. and
    As I see it the consumer who is looking for music to be played in every room, even the garage will be looking a Cisco type of solution. But those consumers who just want something easy and fast may overlook Cisco. And, let’s face it there are more of the later in the market place.

  • Cprotechmaster
    May 29, 2010 at 3:56 pm

    Cisco has always been a key player in the networking and technology industry. They could easily become a consumer electronics company if feasible.

  • Rich the Rock Speakers Guy
    September 17, 2010 at 6:55 pm

    I dont see why the couldnt if they really wanted to.

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