Computer network vendor Cisco Systems is getting ready to sell home router maker Linksys. That's the word on Monday from Bloomberg news service, which cites "people with knowledge of the situation."
According to Bloomberg, Cisco has hired Barclays to find a buyer and handle the sale. In 2003, Cisco bought Linksys for a half-billion dollars, but the sale price now is expected to be considerably less because, as an aging consumer business, Linksys' home and small-office routers have low margins. Since its acquisition, Linksys routers have had a "Linksys by Cisco" brand.
The move is in keeping with Cisco's strategy of focusing on its software and services, and dropping its consumer business ventures. Earlier this year, Cisco closed its Flip consumer video camera business, eliminating nearly 8,000 jobs.
Dropping 'Aspects' of Consumer Business
Cisco had purchased Flip in 2009. As a pioneer in offering a tapeless, inexpensive digital home video camera, Flip was gaining fans, had good numbers and was getting good reviews. Some industry observers have speculated that Cisco was more interested in Flip's intellectual property for its business market than in selling cameras to consumers.
In April of last year, Cisco announced that it was exiting "aspects" of its consumer business and would "realign the remaining consumer business to support four of its five key company priorities -- core routing, switches and services; collaboration; architecture; and video."
To accomplish that plan, it closed Flip and integrated Cisco Umi, its HD consumer webcam, into the company's Business TelePresence product line, among other steps. The company's consumer efforts, said CEO and Chairman John Chambers at the time, would focus on "how we help our enterprise and service-provider customers optimize and expand their offerings for consumers, and help ensure the network's ability to deliver on those offerings."
The Cloud Connect Uproar
In June, Cisco launched its Cloud Connect service and tried to push Linksys router owners to use it -- but ended up creating a storm of feedback from customers.
Cloud Connect provides a service that is intended to make it easier for customers to manage their network, routers, and devices on the network. But, when Connect was launched, the company also updated its new Linksys Smart Wi-Fi routers -- and then the problems began.
The routers, released several months before the Connect launch, had sold more than a half-million units. The update automatically connected the Smart Wi-Fi routers to Connect Cloud, but it also meant that customers could no longer use their existing passwords to log in. Instead, the updated system requested a sign-up for Connect Cloud.
Concurrently, questions were raised about a privacy clause in the agreement for Connect Cloud. The offending language said that the company "may collect and store detailed regarding your network configuration and usage for the purpose of providing you technical support."
Only 'Aggregate and Anonymous'
It also said that the company might share "aggregated and anonymous user experience information" with third parties, such as Internet service providers, and that the would only be associated with a user when the uses provides an ID number to the company. The company said the information was obtained in order to improve the quality of service.
In a posting on the Cisco corporate blog after the uproar, Brett Wingo, vice president and general manager of the company's Home Networking unit, wrote that Connect Cloud "does not actively track, collect or store personal info or usage data" for any purposes other than to "establish an account in order to provide support."
Wingo also added that Connect Cloud would only be delivered to users who opt in for automatic updates, and Cisco allowed users to revert their Smart Wi-Fi's firmware to its pre-update status.