Cisco has made good on its pledge to move away from commodity markets and focus on its strategic B2B products by selling off its Linksys division to Belkin.
Cisco acquired Linksys for $500m (£317m) in 2003 but it was five years before the consumer networking specialist's channel was folded into that of its new parent. In the past 18 months the vendor giant has sought to distance itself from low-end and commodity wares and has canned product lines including its email platform and Flip video cameras.
Speculation emerged last month that it was seeking to shift the Linksys unit and had retained Barclays to hunt for a buyer. It was announced yesterday that the consumer networking vendor has sealed a deal covering the entirety of Linksys' product, brand and employees.
Belkin has signalled its intent to hang onto the Linksys brand name and will take over product support and honour all warranties. The vendor claims the deal will give it a 30 per cent share of the US consumer and small business networking market.
Belkin chief executive Chet Pipkin said: "With complementary innovation and engineering strategies in the combined organisation, Belkin will be able to create new opportunities for consumers, distribution partners and resellers, and will have the strongest retail presence in the U.S. networking marketplace.
"Belkin will have access to a large installed base that will be able to upgrade their networking environment to take advantage of new technologies in the smartphone, tablet, notebook and home automation arenas."
In a blog post, Cisco's vice president of corporate business development Hilton Romanski claimed that his firm has "found the best buyer in Belkin".
"Linksys will enhance Belkin's capabilities to meet the needs of OEMs, as well as provide access to a large user base," he said. "Belkin and Cisco intend to pursue a strategic relationship focused on a variety of initiatives including retail distribution, strategic marketing and products for the service provider market."
Keith Humphreys, managing consultant at analyst Eurolan, claimed that selling off Linksys was the smart move on Cisco's part.
"Cisco have been trying to get into the consumer space for the 15 years that I have been following them, and they have failed. Getting rid of Umi, Flip and now Linksys makes perfect sense. And it fits nicely into Belkin's operations," he said.
Humphreys added that the consumer space needs a different business model that enterprise-focused Cisco had never fully embraced.
"There was [a UK executive] at Linksys who said he didn't want an office at [Cisco HQ] Bedfont Lakes, he wanted a Portakabin in the car park. Cisco never really got that business model - they never had a Portakabin," he concluded.
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