Cisco Take On Apple? Please.

Posted by: Peter Burrows on March 20, 2009

There’s a lot to admire about Cisco. It just might have the deepest bench of executive talent in all of tech. It’s got a fast-moving, egalitarian culture. It’s got one of the most innovative CEOs around, and it’s got over $30 billion in cold hard cash tucked away. Most of all, I can’t think of another company that has so successfully entered so many new markets—from data center servers to telepresence.

But consumer products? I can understand the company selling home networking gear, such as Linksys home routers and Scientific Atlanta cable boxes. What better way to boost Net traffic and thereby router sales.

But these are “gotta have” rather than “wanna have” products. For that reason, put me down as a skeptic (like Between The Line’s Larry Dignan) regarding Cisco’s acquisition yesterday of Pure Digital, the maker of Flip video recorders. In fact, my first thought wasn’t whether this meant Cisco could compete with Apple. Rather, my first thoughts were about why it can’t.

For starters, Apple is all about gut marketing. The company seems to be genetically in touch with the prevailing, mainstream (or at least the elitist, aspirational) zeitgeist. Forget the focus groups, just Think Different. Other than some heartstring-tugging ads of late for its Telepresence videoconferencing systems, I’ve always found Cisco’s consumer marketing to be corporate and not very genuine.

Apple is also all about user experience. Steve Jobs moves heaven and earth to make sure there’s not one too many clicks required to play a song or find a file, and rages against unsightly screw-holes that might mar a product’s aesthetic appeal. Cisco? Not so much. There have been incremental improvements in the ease of use of those Linksys routers. Now, they’re approaching not misery-inducing to configure. That’s not good enough, when you’re selling “wanna have” products like the Flip.

And Apple is all about focus. It does a few things at a time, and does them very well. It doesn’t throw dozens of products against the wall to see what sticks. Jobs is fond of saying that he’s as proud of what Apple doesn’t do, as what it does do.

Cisco couldn’t be more different. While Cisco has long been tech’s most ravenous acquisition machinee, I don’t believe it’s every been as expansionist as it is right now. Just consider the past week. First, on March 16, CEO John T. Chambers unveiled Cisco’s plan to dive headlong into the data center server market, taking on the likes of IBM for massive, nine-figure deals. Two days later, it’s buying a company whose flagship product costs less than $200.

While it was a banner exit for Pure’s founders, I worry about Pure’s customers. I hope that in its efforts to crank up Pure’s sales, Cisco doesn’t snuff out the brand and all the intangibles that make Flip cameras such a delight to own and use.

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Reader Comments

UserRx

March 20, 2009 04:35 PM

Valid point; Consumer market is all about gut driven experience; Flip and other products are a good example of that; Now, Cisco is great company and understand Networking well and truly has a diverse product portfolio like no other.

But, User experience is just not in their forte; They spent a bundle to acquire a company in seattle last year to simplify network configuration for Linksys routers but that hasn't moved the needle much. Why? It automates network setup...not end user experience.

Reason is two fold 1) Leadership- It starts from the top- Ned Hooper is M&A, Corporate guy ..not a product innovation guru or even a user experience maven like Steve Jobs or Intuit's Scott Cook.

2) Cisco Senior Leadership staff is very light on having a person focused on delivering consumer user experiences and very top heavy towards corporate marketing and Enterprise focus. Don't be surprised if Chambers has to make changes in 8-10 months on consumer side.

JC

March 20, 2009 05:04 PM

Totally agree!!

TechCEO

March 20, 2009 05:20 PM

Are you kidding? Apple is about offering as little as possible to perform as little as possible. Cisco is the exact opposite.

Why would you even assume these two companies would compete? If Apple made a router, it would either do nothing (as usual) or require misery inducing configuration.

Seriously, at least try to compare "apples" to "Apples".

rob

March 20, 2009 06:12 PM

What are you even saying in this article? I'm still trying to figure out the point. Are you trying to rat on Cisco or laude Apple? I can't tell. Sorry, just trying make sense of this comparison.

Tom

March 20, 2009 06:14 PM

One little data point from a consumer:

I just happened to have recently purchased an Apple Airport router (the smaller one). Definitely required some geek-speak to install. And then it had a flaky connection.

So I returned it and replaced it with a LinkSys router (forget the model, but it was a recent one). Much easier to setup. It reminded me much more of the Apple user experience I had expected. And I setup both on a MAC.

I was surprised by this unexpected turn of events. Definitely did not match waht the author here described about Linksys routers.

Bob

March 20, 2009 06:17 PM

lame

Dave Reynolds

March 20, 2009 06:36 PM

The argument here is somewhat meandering but if I understand it, the high points are:

1. Cisco isn't Apple
2. Therefore, Cisco will ruin Pure.

The same depth of executive leadership that the article extols is the same leadership that has a strategy for penetrating multiple markets to bring growth to the company. Larry Ellison said several years ago that M&As were Oracle's only real growth strategy.

Cisco owns the enterprise infrastructure. The next sensible markets are SMB and Consumer. Many other large tech companies also eye SMB & Consumer as rich veins to tap. It's a legitimate strategy.

Cisco isn't trying to be Apple. Cisco is trying to generate consumer demand for bandwidth. Consequently, the strategy seems to be to drive bandwidth demands up by creating consumer demand for bandwidth. This is done by bringing media - especially video -- into the hands of consumers in an easy way. That means media servers, video cams that are much like Cisco TelePresence, high quality VOIP, etc. As consumers demand bandwidth, ISPs will need more Cisco network gear.

Cisco has demonstrated a consistent ability to execute, especially during downturns. Apple doesnt have the vision for a multiple market strategy; they are more product-driven. Each has a place in the consumer market.

It would be a mistake to conclude that Cisco will fail and will ruin its acquisitions simply because it's not like Apple. It would be a mistake because it's faulty reasoning.

Michael Poimboeuf

March 20, 2009 06:41 PM

Peter Burros is comparing Apples to Pure California fresh Oranges here. This isn't Cisco taking on Apple at all. This reminds me more of HP in the 80s when they went from making signal generators, scopes, atomic clocks, and rpn calculators, to starting up separate BUs to make computers and printers.

Apple is a Pure partner. Pure hasn't been making iphones, they're making handheld video-cameras. Apple isn't making handheld video-cameras. Let's not lose sight of how consumer product collaboration works in Silicon Valley. Your company makes one part of the puzzle, my company makes another part, and the consumer puts the parts together to make their solution.

The main business take-away I read on this announcement is that Jonathan Kaplan, Pure Digital’s CEO, will become general manager of Cisco’s consumer group. That means there will be an executive at the helm who has shown the same level of drive as Jobs at Apple. Cisco has a culture that allows people like Kaplan to do what they need to do, and I think Kaplan has demonstrated that he knows how to drive the ID and UI to a common denominator that even folks who can't boot a mac can grock.

My 4 year old is shooting movies on one of our several filps. While he might be able to boot a mac, I wouldn't let him whip one around the way he does with the $100 flip. I can afford to lose an 8GB flash drive worth of data, but not all the apps, os, and data on the mac, not to mention the order of magnitude more cost.

Michael Poimboeuf
Silicon Valley Engineer

nona

March 20, 2009 07:16 PM

Apple may be a marketing machine, but it is only under Steve Jobs' direction. I didn't notice that Apple was moving heaven & earth in the period when Jobs wasn't at Apple.

Dean

March 20, 2009 07:50 PM

Cisco wants to do anything it can to drive more traffic on networks to drive the need for more of their products. If they can get people loading videos for sharing, it will accomplish it.. They should give the Flip cameras away.. Just like the inkjet printer markst. Give the camera away and makes loads of money when the carriers and network providers have to upgrade to support all the new traffic

peter

March 20, 2009 08:07 PM

Peter Burrows, are you kidding ? egalitarian ? Have you worked for Cisco. Cisco is not egalitarian at all. You must be on pot to think Cisco is egalitarian. Cisco is silicon valley's slave driver company. Did you see that they recently agreed to pay 20 million for misclassyfing workers as exempt ?

I guess your journalistic profession makes you want to move your hands on the keyboard when they should be idle.

thanks.

Samuel A. Falvo II

March 20, 2009 08:09 PM

Expansionism in corporations is a bad sign, indicating that there is a lack of innovation and agile thinking. I don't want to speak badly of Cisco, but many, many other companies suffer this same symptom, including Microsoft, Google, and Sun. Comparing the quality of products from expansionist companies versus those which concentrate only on core competencies is a no-brainer: the latter are statistically superior in every measurable way, no matter who you ask.

It would be better if Cisco entered into a business partnership with each other; this makes things a win-win-win scenario (win for cisco, win for Pure, and win for customers of both companies). Acquisition reduces things to a win-win-lose scenario (win for Pure as long as nobody gets laid off, win for Cisco, maybe, but a definite loss for the customers).

Chris Burd

March 20, 2009 08:17 PM

As a cisco partner that has been muscled by cisco and its larger partners. Cisco Systems is not the organic company that you give it credit for. Cisco Systems is the big bully on the block that is quickly loosing market share. Releasing inferior product after inferior product. The technical edge it once had is beeing lost to its competitors quickly at best. I can tell you that Cisco forgot about its relationships to its customers along time ago. Just take a look at Cisco Unified Communications manager going all linux, and all of the problems that have followed with it. There IOS is buggier then a termite festival in a wood factory. They think they can enter the consumer market when they are a day late and a dime short. Bottom line like the saying goes, The Bigger they are, the harder they fall.

wetshoes

March 20, 2009 08:50 PM

"If Apple made a router, it would either do nothing (as usual) or require misery inducing configuration."

The apple airport (router) looks great, offers easy set up, and has better performance than most linksys routers, which crash with too many users on them.

Their smallest router - the airport express - is really easy to set up, can act as a relay for an airport, and plays itunes wirelessly to your stereo as well. Wouldn't leave home without one.

HongKong

March 20, 2009 09:02 PM

@TechCeo

Apple makes routers, and they are VERY easy to configure. Its called the time capsule, not only do they function as routers, they also wirelessly backup your laptop every hour (without even being asked, cant get easier than that). That capability puts them leagues ahead of the competition for consumer network devices.

Gregory Curci

March 20, 2009 09:05 PM

TechCEO doesn't seem to know much about Apple products but for some reason has a gripe. Apple makes a router, Airport. It even has 10/100/1000 ethernet, and "N" wireless. It looks good, and just works.
Are you the type of person who puts salt on his food before they taste it?

Someone Else

March 20, 2009 09:12 PM

Uh, "TechCEO", take a look--Apple does make routers, in the form of their AirPort and Time Capsule products. No misery-inducing configuration, just an easy-to-use application that walks the user through the process.

Dan

March 20, 2009 09:34 PM

I wonder what will happen if the banks where Cisco has deposited its 30 billion dollars, happens to be bankrupt.

GuyS

March 20, 2009 09:46 PM

Re: TechCEO

That shows what you know. Apple does make routers, they work flawlessly and are simplicity itself to set up. I know, I've owned
Apple routers and a number of different other brands.

SC

March 20, 2009 09:50 PM

TechCEO, Apple does make a router... and a pretty good one too!

http://www.apple.com/airportextreme/

Aaron

March 20, 2009 09:53 PM

Cisco, from what I see, has preserved it's market share by keeping it's certifian worthy of putting on a resume to keep certified technician's employed and relevent throughout the business world. These are the people who recommend what products to purchase.
Now consider if any Joe could just plug it in and it "just works" with minimal configuration? It would counter Cisco's model of market domination. It even appears as if Cisco is discouraging the use of Linksys gear with their trade up program.
What I'm getting at is moving into Apple's arena would require drastic change in their marketing strategy which I doubt they would do. Why change success?

AppleTech

March 20, 2009 09:58 PM

Apple does make a router,... three of them actually.

Apple's routers have things like usb ports to attach printers,... built in hard drives for network storage & audio jacks so you can stream music from your laptop to a set of speakers.

Apple's routers are also extremely easy to configure by use of a utility (wizard) that walks you through the necessary steps.

They are pricey, for sure, but very functional and simple.
The utility even simplifies setting up slightly advanced configurations like distributed wireless networks.

Pete

March 20, 2009 09:59 PM

If anyone of you has ever use any of the Cisco applications like I have on a daily basis, You will understand how I feel.

Cisco hasn't got a clue about user experience! Their GUI is known as one of the worse in the industry. Cisco is known for their complicated, cult-like command line interface (Known as CLI) that takes years to learn and a life time to master.

I hope Cisco did not acquire this company to enter the consumer market but rather to add value into their existing product line like the author has mentioned. Otherwise itwould be pretty ugly and embarrassing.

duane

March 20, 2009 09:59 PM

What company is TechCEO? I am not buying or investing there.

David

March 20, 2009 10:20 PM

This is a brilliant move by Cisco. Most of us never heard of the Flip before Cisco announced they were buying them. Cisco just wanted to add publicity to this new product area. If future iPhones and Blackberrys have video cameras built it it just adds more bandwicth sucking videos to the network. Cisco just loves that.

CharlesStephen

March 20, 2009 10:33 PM

@TechCEO - Interesting that you say that, because Apple does make a router and it does quite a lot. I have both an Apple and a Linksys router—in order for my Linksys router to do what my Apple AirPort Extreme does I had to flash the firmware and use DD-WRT on it. From my Apple router, I am able to backup my laptop over the air, run a NAS server, attach and manage USB printers for shared wireless printing, among many other things. Moreover, the Apple router has a stellar and easy to use interface unlike the Linksys router either before or after flashing the firmware.

Perhaps you should know what type of apples you are comparing before you do so next time.

Oh Blah Dee Blah Dah

March 20, 2009 10:47 PM

RE: "... If Apple made a router, it would either do nothing (as usual) or require misery inducing configuration..."

Apple DOES make a router. It's called Airport Exteme and it REPLACED my Cisco Linksys router.

tkane2000

March 20, 2009 10:53 PM

Apple does make a router:
http://www.apple.com/airportexpress/
http://www.apple.com/airportextreme/
mac users love these

timta2

March 20, 2009 11:03 PM

"If Apple made a router"...

Like the Airport Extreme Base Station that works beautifully and is a breeze to set up?

Mc

March 20, 2009 11:31 PM

TechCEO: See Airport Extreme

Rolf Bork

March 21, 2009 05:54 AM

"Apple is also all about user experience"...and here Apple leads in a highly focussed niche: CAREFREE (to some extend CARELESS) DIGITAL LIFESTYLE enhanced by BRAND & EMOTION. Apples customers are like "iTunes & MobileMe club members" buying hardware & software & multimedia content that the "club offers". Apples GUI & Services upgrade INTERNET & COMMUNICATION to a "club event".
Cisco is very different and is building new applications/uses enabled by INTERNET & COMMUNICATION. While Cisco & Apple both target the INTERNET & COMMUNICATION enduser there is really very little hostile collision even when Cisco should dominate GATEWAYS OF CONSUMER DIGITAL HOMES. Apple will continue "sit on top" of whatever communication infrastructure with its "CAREFREE DIGITAL ENTERTAINMENT" solutions. Automotive is a good analogy: Plenty of functional networking (CAN bus, Flexray etc) dominated by networking experts BUT ATOP of it IPod interfaces.
On the other side Ciscos move into the DIGITAL HOME is clearly blocking any potential move of Apple into growth applications like ehealth, home security - in essence forces Apple to stay in the entertainment niche. If this scenario is true we should see soon Cisco moves into VIDEO BASED HOME SECURITY systems.
Rolf Bork, BOD mediaf.com & sensitivetech.com

boriscleto

March 21, 2009 10:13 PM

I have a feeling that TechCEO's real name is Steve Ballmer.

BusinessWeek Senior Writer Peter Burrows

March 23, 2009 09:24 PM

Folks -- I'm the author of the piece. Thanks for all the comments. For those who don't think Apple will be competing with Cisco and it's new Flip video camera business, I say think again. Rumors are already cropping up that iPhone OS 3.0 will support video (See this piece at http://www.appleinsider.com/articles/09/03/20/source_apples_next_gen_iphone_has_video_camera.html). I'm not saying an iPhone would be as optimal a solution; Lord knows how fast video-taping the kids would draw down an iPhone's battery life. But it would be good enough for many people, and would certainly impact the size of the total available market for Flip products. On the other hand, one can imagine many ways for Cisco to improve the utility of these desireable little devices. Personally, I'd like to be able to plug it into a USB on my Scientific Atlanta set-top box to easily and quickly view, store and share my videos with other people (without having to mess with my PC, or some media extender to get the video from PC to TV).

Rolf Bork

March 25, 2009 04:43 AM

"Apple will be competing with Cisco and it's new Flip video camera business"...sure, but as video capabilities will become a standard feature for most mobile devices the center of competition will shift. My guess is that Cisco will move fast to integrate Flips "easy-to-use" technology components/design into ALL ITS VIDEO BASED PRODUCTS - videocon to home security etc. - simply to to catch up with USER INTERFACES that Apple masters so well.
Cisco has made clear that video & consumers is the future and now Cisco has to jump start the CONSUMER INTERFACE part of video ACROSS ALL OF CISCOS prodcut range and that is Flip. As a standalone product line it will be "eaten & integrated" by smart phones anyhow - matter of time. But such dynamics are not new for the team that made Flip a huge success - now they can show their talent in making Ciscos video push a consumer success with their USER INTERFACE.
Rolf Bork, BOD mediaf.com & sensitivetech.com

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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