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Cisco Ramps Up at CES After Exiting Consumer Businesses

January 07, 2014

Cisco Ramps Up at CES Even After Exiting Consumer Businesses

John Chambers, chief executive officer of Cisco Systems Inc., during the 2011 International Consumer Electronics Show in Las Vegas. Photographer: Jacob Kepler/Bloomberg

Cisco Systems Inc. (CSCO:US) has shed many of its consumer-technology businesses in recent years. Yet the company is pushing ahead with its largest-ever presence at the International Consumer Electronics Show in Las Vegas this week.

The world’s biggest maker of networking equipment has an exhibit on the main floor of the giant technology trade show this year for the first time. Chief Executive Officer John Chambers will deliver a keynote today, his first at CES since a joint speech with Intel Corp.’s former Chairman and CEO Craig Barrett in 2009. And Cisco is making several announcements, including a deal with Samsung Electronics Co. yesterday to offer Web conferencing capabilities on Galaxy devices, as well as a new cloud-based video service that lets service providers and media companies deliver video to consumers faster.

The flurry of activity comes after Cisco sold its Linksys home-router unit to Belkin International Inc. last year and closed its Flip video cameras unit in 2011. The San Jose, California-based company has since refocused on its core products of networking switches and routers.

Cisco has also cut jobs in recent years as it grapples with slowing sales. Revenue growth is projected by analysts to decline almost 5 percent (CSCO:US) in fiscal 2014, according to data compiled by Bloomberg. In December, the company cut its sales growth outlook for the next three to five years amid weaker demand from emerging markets and telecommunications service providers.

‘Ideal Venue’

Cisco said it isn’t “reentering the consumer business” with its activities at CES. Yet “CES 2014 provides an ideal venue for our executives to interact with key partners, customers and industry influencers,” said Jim Brady, a spokesman for Cisco.

Chambers will use his keynote to talk about the Internet of Everything, or the idea of adding connectivity to the car, and objects inside homes, offices and retail shops. Last year, Cisco formed a group to focus on the concept, with projects include designing wristwatches for soldiers and centrally linking medical facilities and educational systems inside cities. With more devices coming online, Cisco is working to sell more networking gear, as well as software and services.

“We think the Internet of Everything is the biggest transition for the Internet since the birth of the Internet,” Kip Compton, a senior vice president at Cisco, said in an interview.

Consumer Revenue

“I was surprised to see John signed up for a CES keynote, given Cisco’s de-emphasized consumer electronics over the last couple of years,” said Jayson Noland, an analyst at Robert W. Baird & Co., who has the equivalent of a buy rating on Cisco stock. “Consumers are a low single-digit percentage of revenue.”

In statements yesterday, Cisco said its new cloud-service capability for the Videoscape TV platform will let service providers, such as paid-TV companies, roll out offerings to consumers faster by using little or none of their own equipment and paying Cisco for service delivery. The move expands Cisco’s services efforts, which account for almost a quarter (CSCO:US) of the company’s revenues.

At CES, Cisco will also showcase its technology in a simulated retail store, BigBox, where location-based data will be collected from shoppers, and security cameras, video and sensors will help stores manage offers and discounts. At the show’s Visteon Booth, Cisco will demonstrate how its technology can be used in connected cars.

Cisco said yesterday that it’s teaming up with Samsung to feature its Web conferencing WebEx Meetings app on the home page of some Galaxy tablets. Samsung’s Galaxy devices will let users share their screen, turn a call into a WebEx meeting or start a meeting from a contact list. Galaxy users will get WebEx Meetings Premium 8 accounts for free for six months.

“What you will see on the collaboration side for us is really increasing focus on the mobile devices,” Compton said.

To contact the reporter on this story: Olga Kharif in Portland at okharif@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net


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Companies Mentioned

  • CSCO
    (Cisco Systems Inc)
    • $25.68 USD
    • -0.27
    • -1.05%
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