Cisco to enter consumer electronics market

Cisco, the biggest maker of internet networking equipment, plans to enter the mainstream consumer electronics market, challenging companies such as Sony and Samsung in the production of radios, stereos, phones and home theatre equipment.

Charles Giancarlo, chief development officer at Cisco and head of the company’s Linksys home networking division, told the Financial Times that changing requirements from consumers for devices that can link to the internet gave the networking equipment company an opportunity to enter a new market.

“Consumer electronics companies have been able to compete on a stand-alone device but the dynamics of the market are changing,” he said. “The internet and new networking requirements are enough of a disruptor for us to enter a new market.”

Mr Giancarlo believes that Cisco’s close relationship with online content companies such as Google and Yahoo will also give it an advantage over consumer electronics companies.

Cisco is best known for making routers, which connect and direct internet traffic, originally mainly for business customers. However, through the Linksys division, which it bought in March 2003, the company has been moving into home networking products.

Linksys already has a $1bn business supplying wireless routers for home use and phone adaptors that allow ordinary telephone handsets to be used for making calls over the internet.

In November, Cisco bought Scientific Atlanta, the US maker of television set-top boxes, for $6.9bn, giving it a far more substantial presence in the consumer hardware market.

The acquisition of Denmark’s KiSS Technology for $61m in July has also helped the company develop its product range. KiSS makes DVD players and recorders that can be connected to the internet. The same technology, Mr Giancarlo said, could be used to make other media and communications devices.

Steve Kammen, analyst at CIBC World Markets, said it made sense for Cisco to try to increase its reach in the digital home market.

“The home network is the last piece of territory up for grabs in the networking space and it makes sense for Cisco to try to dominate that,” he said.