Almost 10 years ago to the month since Cisco announced it would acquire Linksys, the company has told investors it has agreed to sell the unit to Belkin, the privately held home networking specialist based in Los Angeles, CA. Financial terms have not been disclosed. The transaction is expected to close in March 2013.

What is often misunderstood about Cisco’s recent strategic moves, including the closure of its Flip video camera business, is that it still has a strong interest in consumer markets: what has changed, and is now complete through the Linksys divestment, is that Cisco no longer plays directly in the consumer retail space – instead it supports its service provider customers in delivering solutions to end consumers. In that role Cisco still maintains a strong interest in understanding and driving emerging connected consumer technology trends.

The most interesting aspect of the Belkin deal is that Cisco will enter a strategic relationship with Belkin “focused on a variety of initiatives including retail distribution, strategic marketing and products for the service provider market”. My interpretation of this is that Belkin and Cisco will work together to support Cisco’s service provider customers in home networking product development and distribution. Apart from any transaction fees (and its rising share price) this would appear to be the one benefit to Cisco from the Belkin deal.

Cisco’s ten-year odyssey through the world of low margin consumer electronics has been exciting and expensive. In the early days we questioned whether Cisco would become a major consumer technology brand alongside Samsung and Apple. And when the company introduced wireless home audio systems and media hubs in 2009 it looked like things might begin to accelerate. As I wrote at the time, Cisco’s consumer strategy at that time represented a “compelling, yet high risk vision”.

The wireless audio strategy proved to be disastrous, and once the economic downturn hit Cisco’s corporate results the financial markets zoomed in on the weak spots. Linksys’s low margins (relative to Cisco’s traditional enterprise businesses) meant trouble and the writing was on the wall. It was only a matter of time before retail consumer electronics would become an interesting footnote in Cisco’s history.

David Mercer

Strategy Analytics has been designing and analysing large scale consumer surveys for many years. Some of this work has been used by our industry analysts to support their regular market and competition tracking. We have also conducted frequent consumer surveys to support proprietary project and consulting activities.

Recognising that every client has its own particular set of interests, questions and perspectives, we have now opened up some of the results of these surveys to our client base via a powerful new web-based interface and analysis tool. The ConsumerMetrix service collates the results of three years’ worth of survey results, comprising more than 15000 online consumer interviews and offering millions of unique datapoints. Survey results are easily selected and instantly available according to the needs of the individual user, and can be downloaded in Excel and Powerpoint format for incorporation into customers’ own reports.

ConsumerMetrix surveys cover the US, France, Germany, Italy and the UK. Additional international market coverage, including Canada, Spain, China, India, Japan, South Korea, Russia, the Nordic region, Poland, Hungary, Brazil, Mexico and Indonesia, is available at the request of subscribers.

Subscribers can use ConsumerMetrix to assess survey data about the world’s leading technology and service provider brands and who their current and potential customers are.

ConsumerMetrix: Major Technology Brands

Acer, Apple, Asus, Compaq, Dell, Emachines, Facebook, Gateway, Grundig, HP, HTC, JVC, LG, LinkedIn, Motorola, MySpace, Nokia, Packard Bell, Panasonic, Philips, RIM/Blackberry, Samsung, Sanyo, Sharp, Sony, SonyEricsson, Toshiba, Twitter, Vizio, Youtube

ConsumerMetrix: Major Service Provider Brands

3, AT&T/Bell South/Cingular, Bouyges Telecom, BT, Comcast, DirecTV, Dish, E-Plus, Free, Kabel Deutschland, Mediaset PremiumNeuf Cegetel, O2, Orange, SFR, Sky, Sprint/Nextel, TalkTalk, Telecom Italia, T-Home, TIM, Time Warner Cable, T-Mobile, United Internet, Verizon/Alltel, Virgin Media, Virgin Mobile, Vodafone/Arcor, WIND

 

ConsumerMetrix is designed to answer key tactical, consumer-facing questions like:

·         How many people plan to buy an Xbox 360 or PS3 during the next 12 months?

·         How do nations vary in usage of digital video recorders?

·         How do the profiles of Samsung and Sony customers compare?

·         Which television service providers have the highest satisfaction ratings?

·         Which brands are people most likely to choose when they next purchase a TV, PC or mobile phone?

·         How do the demographics of Apple v. PC owners compare?

·         How many people are using the major OTT video services and which devices are they watching them on?

·         How much do consumers expect to pay for iPads or other tablets?

·         How useful do consumers find TV mobile phone apps?

·         Which consumers are using multiscreen TV?

·         How many Sky Digital customers plan to drop the service during the coming 12 months?

 

ConsumerMetrix covers a wide range of themes and technologies related to the digital consumer, television, video and media sectors. The outline is presented below:

 

ConsumerMetrix Survey Themes

ConsumerMetrix Product Segmentation

•          Attitudes to payment and finance •          Household device ownership •          Personal device usage •          Device purchase intentions •          Device price expectations •          Brand ownership •          Brand purchase intentions and preferences •          Service provider customers •          TV, Fixed Broadband, Mobile Broadband, Mobile phone, Home phone •          Broadband and television access technologies •          Television service fees and satisfaction •          Managed home services •          3D television and video •          Advanced television services and features: availability, usage, perceived value and interest •          Television service: propensity to churn •          Future television concepts •          Online television and video services and applications •          Connected video device usage •          Social networking users and brands

•          Consumer Devices: Connected TV, HDTV, 3DTV, LCD/plasma TV, Blu-ray, Xbox 360, PS3, Wii, PS2, PS Vita, Home cinema, Home computer (desktop, portable, PC, Mac), Handheld games (PSP, Nintendo), Digital TV set-top box, Apple TV, Connected TV boxes, mobile phone, iPhone, smartphone, iPad, tablet, broadband WiFi router, Internet radio, camcorder, e-reader, home monitoring camera, iPod, personal audio player •          Broadband/TV Access Technologies: Cable, xDSL, Fiber, WiMax, Mobile data card/dongle, satellite, terrestrial broadcast, IPTV •          Advanced TV Features (selected examples): VOD, Pause/rewind live TV, Series recording, Mobile phone app, caller ID, whole home DVR, internet access •          Online TV device usage: TV/PC, TV/console, TV/media server, TV/Blu-ray, TV/digital media player, Connected TV, PC, Tablet, Smartphone

 

We are excited by the strong interest already shown in this service, which we believe is unique in many respects. Please email digitalconsumer@strategyanalytics.com for further details and a personal demonstration.

David Mercer

Barely two years after first announcing its intention to buy Pure Digital Technologies, makers of the Flip camcorder, Cisco is closing the division, making 550 people redundant. The move is part of a series of steps intended to drive Cisco’s business towards “greater operational excellence”.

As well as closing Flip, Cisco will “re-align” other elements of its consumer business in line with its core strategic objectives. Specifically, that will mean that Umi, the consumer telepresence business, will be folded into Cisco’s Business TelePresence unit; and the Linksys home networking group will be refocused towards the core networking infrastructure activity at Cisco.

Video remains a core strategic objective for Cisco, and its vision remains that the network will expand into a video platform in the home. But the company has accepted that retail consumer electronics is, for the most part, outside of its competency, and will now focus its efforts on helping its service provider customers to maximise the potential of the dramatic changes in consumer media and technology markets expected over the next 5 to 10 years.

We have tracked Cisco closely over the years, and have noted on many occasions the challenges associated with a dual service provider-retail strategy. Not just because of the potential customer conflicts this entails, but also because of the highly contrasting economic and business challenges of retail and service provider models. If Cisco had been serious about consumer electronics, its overall results would inevitably have been impacted by lower margins: the only major player which has managed to avoid this golden rule is Apple. The real disappointment with Flip was that its famed ease of use and software strengths could not be transferred to other Cisco units in the consumer space.

Cisco's announcement includes a review of the Eos Media Solutions products in terms of its integration with core video technologies. Eos is a key element in the Videoscape strategy announced at the end of last year, so its future is particularly important. If Eos capabilities can be repositioned towards the needs of video service providers in over-the-top video and television services, this can only be a good thing.

Cisco may be pulling out of consumer markets, but they remain vital to the company’s interests. How and how fast consumers switch to IP-based video services and devices over the coming years will have a major impact on the company’s core technology and network businesses.

David Mercer

Client Reading: CES 2011: Connected TV Growing Up and Tablets Join the Ecosystem

Returning to temperate climes after my first “summer” visit to Las Vegas, I am more amazed than ever at Nevada residents’ ability to withstand daily temperatures of 40 degrees plus and practically zero humidity. At least I now know what 108 Fahrenheit feels like. The contrast between this and a proper British summer (a few days of 25C followed by cool cloud and rain) could not be more stark. Las Vegas’ Mandalay Bay was the venue for Cisco’s annual customer gathering, which this year also brought together a hundred or so analysts for in-depth discussion of product and commercial strategy. The highlight product announcement was the Cius, as reported by my colleague, Susan Welsh de Grimaldo. While the company has not officially announced pricing, I expect it to be closer to $1000 than $500. Cisco is quite clear that the Cius is positioned as an enterprise solution, and these prices are likely to prevent much leakage towards “unofficial” consumer markets. What was most interesting, perhaps, is the genesis of the Cius within the Cisco organisation. It was obvious from many conversations that few people were aware of its development until very shortly before its unveiling. Even John Chambers himself claims to have been unaware of it until two months ago. If the product proves successful it will be further justification of Cisco’s innovation in organisation and management which allows dynamic cross-fertilisation of ideas across multiple teams. The other news centered on home energy management, where Cisco is launching a “Home Energy Controller” allied to Cisco Energy Management Services, which will be offered by utility companies to help consumers understand and control their energy consumption. The Controller uses Zigbee, WiFi and other home networking technologies to exchange data with and, potentially, control a variety of home devices. Much of our discussion with Cisco execs centered on the challenges and opportunities for service providers offered by OTT video, as well as the potential for telepresence in the home environment. Telepresence has a been a success for Cisco in the corporate market, and it is still on track to bring a consumer solution to the market by the end of 2010. It still strikes many people, both in the industry and consumers, as odd that Cisco should have a serious consumer strategy. While its brand presence is growing, not many would consider it as a competitor to the Sonys, Samsungs and Apples of the world. And there is no doubt that the company’s financial power is built on its core network switching and routing market dominance. Cisco does have key positions in home networking and set-top boxes, as well as the TV and broadband service provider space, but the jury is still out on whether Cisco itself will become an overall leader in consumer markets over the next decade. But consumer players cannot ignore Cisco as an influence on market direction. Its innovation processes, as demonstrated by Cius, will combine with its financial strength to create a wave of consumer innovations over the coming years. Many may fail, but it will only take a few to be successful for rivals to feel the heat. Client Reading: Chasing the Elusive IPTV Business Model: NDS, Cisco and Comcast to the Rescue?

As we reported today, the global IPTV subscriber base reached more than 30 million households last year. It's difficult to imagine that major vendors such as Alcatel were predicting 100 million by this stage a few years ago. That sort of over-optimism is hardly new, but in this case reflected a failure to appreciate the strategic challenges facing telcos as they entered the TV market. My colleague Ben Piper suggests that the IPTV market globally may be hitting a speedbump: perhaps it just never built up much speed in the first place. IPTV was supposed to be different. The built-in ability to integrate communications services with content delivery, together with one-to-one targeted delivery, would enable powerful and compelling new features and experiences which would help telcos leapfrog their established competitors in the cable and satellite industry. But instead of changing the game most telcos which offer IPTV today still play to the rules originally fixed by the incumbents. Most could not avoid getting dragged into content rights battles and disputes, and few if any have deployed the sort of exciting advanced capabilities which have been on show at countless exhibitions over the past decade or so. Which brings us to this year's IPTV World Forum, opening tomorrow at London's Olympia. Ericsson gave us a preview of its announcements this evening, which are encompassed by the new tag-line “End-to-Endless Television”, or “E2E TV” for short. Sure enough they include subjects such as on-demand advertising, new connected IP devices and hybrid solutions. Without doubt what I am most looking forward to seeing is Ericsson's IPTV Remote. Someone will explain to me one day why a home device with no obvious cellar network implications was launched at Mobile World Congress; in any case now that the mobile phone industry has seen it we await reaction from its core target customer base. Ericsson describes the IPTV Remote as the best thing they have done in a long while. The challenge for Ericsson, like its competitors, is that it does not sell these products to consumers, who are the end users, but to service providers and operators, who decide what they think their customers will want and will make them money, before making them available to the likes of you and me. Ericsson carries out a lot of its own consumer research to identify future customer needs, but it still has to persuade its operator customers of the validity of these predictions. Many of these scenarios sound good in a Powerpoint; Ericsson’s own presentation sees the future of TV as “blended services”, “converged interactive communication”, and “your media anywhere, anytime”. I hate to sound like a weary old cynic, but we have heard these promises more than a few times over the years. But I do look forward to seeing the IPTV Remote in action, and maybe, just maybe, this 10” touchscreen “tablet” (definitely not an iAnything) will persuade operators that their customers might value their service over their competitors for the privilege of using a particular device, rather than receiving targeted ads or first run movies. Our own research showed TV viewers are waiting for touch screen controllers, so Ericsson may be on to a good thing. David Mercer Client Reading: Orange's IPTV Challenge: Create a Non-Content Differentiator

Apple cynics seem to have taken the initiative following the announcement of Apple’s iPad internet tablet. I tend to shy away from anything as hyped as this product has been. Surely the most hyped Apple device ever... And for that reason alone I am feeling underwhelmed. Is the iPad really what this was all building up to? Let's think about the applications: Books - ok, I get this. if you want e-books this seems like a reasonable way to carry and read them. A nice way to read newspapers as well – I’m not sure the publishers will make money from it though. Web browsing and applications - I suppose the brower must work well. This is definitely the primary set of apps in my view. Consumers need an easy and fast way to get to websites quickly when they’re at home and don’t want to boot up the laptop. Music - ok, but who would rather listen to their music through a 1.5 pound portable device with (presumably) tinny speakers rather than either a) a small iPhone/Pod plus headphones, or b) plus docking device? Photos - yes of course – iPad could be a very nice digital photo frame. Games - could eventually become a killer app but control and input functions will need to be adapted to a larger screen device and iPhone app developers need to get to work to match the screen's HD resolution. Productivity applications - I'm struggling here. is this really how the iPad is going to get used? The virtual keyboard may be good, although early reports are not promising. But think about how are people going to hold or rest this device: sitting down in a chair - it would have to rest on the flat table, so you are leaning over it to use it properly. Sitting in an armchair - so it's on your lap, but again you have trouble positioning the screen at the right angle; or standing, so you hold it resting in one arm and only have one arm free to touch the screen. Or you use a stand and add-on keyboard, and it becomes... a laptop! OK, maybe the iPad could be used occasionally for productivity applications, but I just don't see this device as a breakthrough for work-based devices. and finally... Video. Video playback is reported as stunning - I can believe this. But where are the extra video content applications or TV deals? The specialised video apps like TV-transfer? No HDMI for TV connection? Apple seems to be struggling more than ever to break into the home video market in a big way. And no multi-tasking… this is crazy. I can't play music while I surf?! Form factor: maybe I was expecting too much from Apple, but really the iPad is hardly a revelation. Have they done what we expected? ie take all previous tablet-type implementations, improved on them and added innovative style and usability and content integration to create a unique package? I don't see this from what I've read and seen. And it's too heavy to be held in one hand, much heavier than some e-readers. Wireless: So the key question - how often would this device be used in truly mobile situations, and of those situations, how often would a user need to have cellular data service? The cellular service can be bought ad hoc - and I think it will be primarily. Not much new recurring revenue for carriers there then... The iPad is surely primarily a “free data” wifi device. It doesn’t need always-on connectivity for messages and voice - I'm always going to carry a phone for those. I can get online for websites and apps via hotspots when needed, and primarily use my home broadband to load it up with content. Having said all this, of course the lower than expected price points mean they will sell millions to Apple fans who won't blink at spending another $500 on the latest Jobs gizmo. (And did anyone at Apple really not investigate the unfortunate connotations of the device name for the female market? - one wonders if Jobs has really lost his touch.) Client Reading: Consumer Imperatives for Digital TV Media Browsers

Cisco has agreed to acquire Tandberg, the videoconferencing specialist based in Norway, for around $3bn. Cisco has long targeted video conferencing, or telepresence, as a major growth opportunity, and also sees a mass consumer market for home telepresence solutions in the longer term. The Tandberg move will boost Cisco’s position in the global corporate telepresence market, which has been a growth segment in recent years, and not just because companies are cutting back on travel. Our main interest, of course, is the emergence of consumer telepresence solutions and other emerging media businesses. Cisco states that it hopes the Tandberg group, which will become the Telepresence Technology Group within the Emerging Technologies Group at Cisco, will drive video innovation. We look forward to hearing how Tandberg will drive further innovation in the critical video element in Cisco’s strategy. Twitter: twitter.com/DavidMercer_SA Client Reading: Digital Media Devices Global Market Report

Nokia’s annual development showcase is taking place this week in Stuttgart, conveniently placed, for the 2000+ international visitors, adjacent to Stuttgart airport, which is not nearly as bad as it sounds. After a day of analyst meetings we spent today listening to senior executives outline the company’s future plans and examining its latest device and service offerings. A major highlight was the unveiling of the recently announced Booklet 3G, Nokia’s first foray into non-handheld devices. Actually that’s not quite true, but you have to be an industry veteran of at least 20 years’ standing to remember when Nokia last manufactured PCs, or indeed the myriad of other products it used to be known for. It abandoned most of its traditional businesses as part of its rationalisation response to the Russian economic crisis of the early 1990s, and after it identifed mobile phones as the next technology wave the company has never looked back. Nokia’s explanation for (re)entering the PC space is that convergence is happening and is here to stay. In other words, it sees computing competitors (read Apple, Google) eating into its phone business, as phone handsets take on more and more of the capabilities associated with the PC. The logic is that Nokia can counter these threats by bringing its communications expertise to the PC space. The Booklet 3G is Nokia’s first response. I hope it is not their last. We could waste many hours discussing the finer points of English vocabulary, but this is indeed a “netbook”, at least as far as anyone can point to a clear definition of that word, and that may not be very far. It could also be a “laptop”, which is how John Hwang, who heads this new Nokia business, described it yesterday. Or to be precise, “a high end mini laptop”. So take your pick. It is, without doubt, a computer. From the various videos and demonstrations it seems that Nokia is trying to position the Booklet as a handheld device aimed clearly at portable applications. Promotional videos featured young, attractive (inevitably) people holding their Booklets in one hand while walking along streets, chatting idly with friends and surfing the web in attractive (inevitably) locations like ski resorts and wine bars. Actually I made that up, but you get the picture. For the record, the key features are Windows 7, 1.6GHz Intel Atom Z530 processor, 1GB RAM, 120GB HDD, claimed 12 hours battery life, 10.1” display, HDMI, GPS, accelerometer, Bluetooth, webcam. You may have spotted a couple of items which mark the device out from the usual netbook crowd. With GPS, accelerometer and 3G the Booklet is clearly designed to further strengthen Nokia’s position in the navigation and mobility applications segment. Retail price will be €575 plus tax. Nokia is confident (you can assume the deals are more or less done) that the Booklet will be heavily subsidised by mobile operators in return for the user’s long-term commitment to big fat monthly mobile data fees. The booklet is a nice-looking, well designed and high quality device. The to-ing and fro-ing around its categorisation is not coincidental, since its specification probably comes close to some low end notebooks/laptops. But prices for those start at €300 or less, while top end netbooks struggle to reach Nokia’s price point. As with Nokia’s phone business, it seems that close cooperation with operators will be necessary to ensure that Nokia’s return to the PC business is not a short-lived affair. Twitter: twitter.com/DavidMercer_SA Client Reading: Digital Media Devices Global Market Report