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Editorial
(March
20, 2003)
From
Publisher and Managing Editor's
Desk...
Topic - Cisco's Acquisition
of Linksys
"On Thursday March 20th,
2003, Cisco, the networking giant, announced that it is acquiring Linksys
for $500 million. This is a significant acquisition because it indicates a
number of trends in the wireless networking arena. While the analyst
community will soon write a lot on this acquisition, MobileInfo.Com is
providing a few early comments on what this means, in our view. On the first
glance, it may be confusing that Cisco has decided to acquire a vendor that
is not of immediate interest to its enterprise WLAN market. So we wonder
what is the motivation and game plan. This implies the following:
-
Wi-Fi WLAN market
is fast maturing. It has become a sizable market in its own
right This is no surprise to
anybody. In fact, Wi-Fi is among the hottest markets in the IT
infrastructure sector today.
-
Acceptance of
Wi-Fi as a first tier connectivity mechanism for notebooks
to enterprise networks is almost absolute now. Wi-Fi has become
a default feature in all notebooks. IT is becoming more integral
component in high-end PDAs, especially in PocketPC handhelds. It
has its eyes on smart phones as well, though Bluetooth is the
default method for the time being. With prices of these chips
coming down, it has the potential of getting into high-end
phones as well.
-
Cisco is already
one of the leading players in the enterprise segment of Wireless
LAN
market. In the SOHO sector, it is (was) Linksys who is (was) the leader. Cisco
does not invent technology - it just acquires it from the market
as successful startups validate the market. Cisco did not have
an offering of its own three years back, but it marched into wireless LAN market by acquiring
Aironet.
-
Linksys deserves
much credit because more than any other vendor it commoditized
the market by aggressively bringing the price down and making it
very simple to install the wireless access point router. It very
quickly provided better encryption than what WEP provided.
-
Cisco is very
definitely interested in the enterprise market more than the
SOHO market, for the time being. However SOHO market is growing
rapidly. Controlling
enterprise market and SOHO market at the same time may be very
tantalizing. The consumer/SOHO networking market is expected to grow from $3.7 billion in 2002 to $7.5 billion in 2006 worldwide.
However, you need different channels of
distribution for SOHO market than for the enterprise market.
- Chander Dhawan
For your comments, click
here.
Chander
Dhawan - Your Site's Principal Consultant and Publisher
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