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Home Page 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:

  1. 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.

  2. 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.

  3. 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. 

  4. 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. 

  5. 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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