Cisco Figures-Out Consumer Sales

by Dave Michels

What’s all this talk about Cisco exiting consumer businesses? Just because Cisco killed Umi, Flip, and now sold off Linksys to Belkin, don’t come tthink that Cisco doesn’t like consumers. A consumer after all is someone that uses and/or eats something. And that includes things like bandwidth and CPU. Cisco loves consumers!  The challenge has been capturing personal rather than just corporate consumption. Cisco does have a plan for both.

Consumerization was all about moving IT decision making toward the actual user rather than IT or purchasing departments. BYOD is the poster child of consumerization. Everyone wants a piece of that consumer pie, even Microsoft has succumbed to opening retail stores. The problem for Cisco is its highly tuned infrastructure is optimized for B2B. It needed to re-think its effort to capture the personal consumer’s wallet that didn’t involve building a whole new go-to-market business model.

In the midst of shedding all of its consumer oriented businesses, earlier this month, Cisco announced a new relationship with AT&T Wireless. Cisco will manufacture the new wireless home security and automation control panel that it designed specifically for AT&T. Don’t bother your local Cisco dealer for this device, it is only available through AT&T. The carrier announced its new brand called DigitalLife brand at CES and it will launch in eight US markets this Spring.

The is the new consumerization – same as the old – B2B while letting the latter deal with it. In this case, it leverages what both firms are good at. Cisco got the hardware which involves wireless broadband and integration with AT&T 4G, and AT&T has the consumer offer and monthly service.

More interesting than the model itself is the domain of Home automation. This is an industry that time just remembered, and it is expected to explode. The technology is getting better and cheaper, the lights are getting smarter, and the heating fuel is getting more expensive. Nest shook things up last year with a fairly simple thermometer. New competitors are rushing into the space including utilities, and new software start-ups are plentiful. Increasing M&A as the space transforms into a broader more appealing solution. Lutron recently acquired Home Automation Inc, and Microsoft just acquired R2 Studios.

As a home automation enthusiast myself  there’s plenty of opportunity here. The space is largely comprised of esoteric primitive solutions. The cost and complexity keep home automation restricted to geeks. My home has expensive wired in-wall panels that most homes don’t have, which effectively restricts market size. However, The Internet of things includes the home with lots of newly connected household items from appliances to light bulbs, and the controller doesn’t need to be wired any more thanks to Wi-Fi and Zigbee. Even better, household members can use smartphones to remotely access their control panels – from the couch or (thanks to 4G/LTE) from anywhere. AT&T is also focused on the connected car, and these two domains have lots of potential interaction as many devices can conclude a desired state (alarm, temperature, lights) based on where the car is or heading.

While you might be thinking Cisco is done with the home, it isn’t – it’s just done with the homeowner.