When you think about companies that dominate specific technology markets, alongside names such as Apple, Microsoft, Facebook, Google, Intel. SAP and Oracle, you would no doubt include Cisco Systems. Founded in 1984, the networking giant, which has grown largely via acquisition over the years, earned $43 billion of revenue in 2011. That placed it at #64 on the 2011 Fortune 500. Cisco has a current market value of about $113 billion.
Linksys, acquired in 2003, has remained among the top-selling home networking brands, and Cisco recently moved to bolster its TV service provider business -- formerly known as Scientific Atlanta -- with the acquisition of NDS. But for all the success that Cisco has had building connections among network endpoints, the company has had a tough road when it's come to selling end-user devices directly to end-users over the last few years.
Music Director multi-room home audio system
With a purpose inspired by Sonos and an industrial design inspired by the 20th Anniversary Macintosh, Cisco introduced the awkwardly branded Linksys by Cisco Director as part of a multi-room home audio system at the 2009 Consumer Electronics Show in a press conference that somehow managed to be largely about enterprise networking. Unlike Sonos, which uses an altered version of the Wi-Fi standard to create a mesh network in a home, the Director and its companion components (including an LCD-based controller) used standard Wi-Fi. The product was reviewed as difficult to set up, Cisco had little home audio credibility, and failed to get deeper into acoustic design and mass merchants the way Sonos has.
Who's made it work? Apart from companies focused nearly exclusively on the custom install market, most notably Russound, Sonos continues to own the DIY wireless multi-room audio business although some see AirPlay as a possible threat.
Cisco acquired Pure Digital, maker of the Flip digital camcorder, later in 2009. It was a contrast to Cisco's homegrown failures that tended to be expensive products launched into immature markets. The Flip, with its simple controls, integrated flash storage and pop-out USB connector, had pioneered the "shoot and share" camcorder space, fended off a move by Apple to add video to its iPod nano, and had had several scintillating holiday seasons, selling millions of camcorders over the years and even nurturing a third-party accessory market; Cisco was investing in the Flip brand and Pure Digital's mantra of minimalistic simplicity, inspiring a new line of Linksys routers dubbed Valet.
However, in 2011, on the eve of the division announcing a new line of Wi-Fi-enabled camcorders that would have brought the strongest tie-in with its parent, Cisco suddenly shuttered the Flip group and laid off its hundreds of employees. Failed acquisitions of consumer products aren't unusual as HP showed with Palm. But Flip was going strong when Cisco flipped off the switch in the name of returning to its focus. The company claimed that the casual camcorder space was a dying business in the face of smartphones that could capture high-definition video, but the rise of smartphone video capture quality was clear when Cisco purchased Pure Digital. Regardless, other companies made offers to purchase the Flip business. Cisco refused to engage them.
Who's made it work? Flip's exit from the market ceded leadership to rivals Sony and Kodak; the latter has announced that it is dropping out of the consumer imaging device market it pioneered over a century ago. Companies such as DXG attack the low end. The market for small flash camcorders has also expanded to include wide-angle POV action cameras from GoPro, Contour, Drift and others.
Umi videoconferencing system
In October 2010, Cisco unveiled Umi (pronounced you-me), a two-box high-definition videoconferencing system that used HDTVs. as displays. Cisco claimed that Umi was targeted at consumers as well as businesses. As with the multi-room home audio product, Cisco staked out an emerging network-friendly device category. However, it publicly focused more on the idea of selling videoconferencing as a service through ISPs. And while the Umi, at $600 for the 1080p version, cost a good deal less than decking out a home with Cisco''s 2009 vintage audio gear, it was still a pricey proposition even before considering the ludicrous $25 per month service fee (eventually slashed to $99 per year in a last-ditch effort). After the Flip shoe dropped, Umi's wasn't far behind and Cisco withdrew the product from the market at the end of 2011.
Who's made it work? While video chat is taking off more on mobile platforms than on TVs, a number of inexpensive TV add-ons from startups such as tellyHD and Biscotti offer video chat for less than $250 per TV with no service fee.
OK, that's enough of this small-time consumer stuff. Cisco seemed to embrace its inner enterprise focus with the 2010 debut of the Cius tablet, an unapologetically business-focused 7" Android tablet that curiously used Intel's Atom processor. Once again, Cisco came in at a high price point; the Cius was generally available at $1,000 or more. But the company recently announced that it would discontinue the product, making the Cius tablet the latest in Cisco's string of gadget gaffes. In fairness to Cisco, few Android tablet makers have gained much traction, with even the Kindle Fire a flickering presence in the iPad's spotlight.
Cisco attributed the cause of death to the trend of consumers bringing their own device into the workplace, but -- like RIM's PlayBook -- the Cius was designed to appeal to IT environments where that was presumably not an option or discouraged. Since the state of tablet management hasn't seemed to improve dramatically since 2010, either Cisco's target market was too small or the product simply wasn't attractive to it. Or, to paraphrase a recent tongue-in-cheek ad campaign for Jameson whiskey, maybe it was the price.
Who's made it work? Amazon continues to have success with a 7" Android tablet and other companies, such as Samsung, Acer, and Barnes & Noble, continue to sell such devices. RIM, which continues to see limited success with the 7" PlayBook that initially catered more to enterprises, has introduced more consumer-friendly features in version 2.0 of its OS.
Back when IBM sold its PC business to Lenovo, it acknowledged that building consumer devices simply wasn't one of its core competencies. There's certainly nothing inherently wrong with dabbling in new markets and, with the exception of the Flip flip-flop that had a negative impact on its financials, Cisco hasn't been much worse for the wear. But the company that put the "king" in "networking" has developed an uncanny knack for launching trial balloons that saunter into the middle of archery fields.