Posted on Thu, Jan. 19, 2006


Cisco taking steps toward living room
HOME-ENTERTAINMENT PRODUCTS ROLLING OUT FOR CROWDED MARKET

Mercury News

Cisco Systems appears poised to finally make good on its promise to step into the home-entertainment spotlight.

The San Jose Internet equipment maker has long made clear its intention to link people's home electronics to each other and to the Internet, whether it's their televisions, personal computers, phones, digital video recorders, stereos, cell phones or music players. And now, products are starting to roll out.

A Cisco executive was quoted Wednesday on cnet.com as saying Cisco's Linksys division plans to announce the creation of a home-entertainment unit in February, and also launch new DVD-like products at the same time. A Cisco spokeswoman would not confirm the executive's comments.

After several recent acquisitions of companies that focus on consumer electronics, analysts expect Cisco to launch several new products in 2006 that build off those companies' strengths as well as Cisco's expertise in managing Internet data traffic.

The challenge for Cisco is whether it can succeed with its limited experience in consumer electronics against big names like Sony, Apple and Intel.

Linksys already unveiled the DP-600, a high-definition, networked DVD player earlier this month at the Consumer Electronics Show in Las Vegas. The player connects wirelessly to the Internet and allows people to play high-definition video, listen to more than 3,000 radio stations and view online stock and weather information. It is expected to be available in the United States later in the year.

Crowded field

But in the so-called digital living room, Cisco is finding itself competing with seemingly every other technology giant, including Intel and its ``Viiv'' brand of home entertainment computers, Microsoft and its Windows Media Center software, and Yahoo's ``Go''-branded photo, music and information services that work on multiple devices. And that's not even taking into account all the makers of set-top boxes, such as TiVo, and other entertainment devices.

Cisco itself got into the set-top box business, acquiring Scientific Atlanta for $6.9 billion last year.

Analysts say it's too early to tell which companies will win out, or whether it will matter that Cisco doesn't have the same consumer-electronics brand recognition as say, Sony.

``In one respect, companies like Sony and other traditional consumer electronics players have an advantage in this market because they clearly understand how to sell products to end users, whether it's the Walkman or the PlayStation, for example,'' said Clay Ryder, president of the Sageza Group consulting firm. ``Others aren't as brilliant in that regard. Cisco doesn't have a huge retail presence. Of course, they have money and if you apply money you can get different solutions.''

Time is right

But, as more and more home products that once existed on their own become connected to the Internet and to one another, it's a perfect time for Cisco to jump in, analysts say.

``They see it as a potential growth segment,'' said Michael Paxton, a senior analyst at In-Stat. ``You have a lot of different product segments and categories being sold into the homes -- video recorders, HDTVs, home theaters in a box, and you also have an increasing number of broadband-subscribing households. They're looking into the future and saying, `We should make all these end-points talk to each other.' ''

Cisco reiterated its ambition to dominate the crowded home-networking market Wednesday.

``We believe there is an emerging market for connected consumer electronics as there is a convergence occurring between traditional consumer electronics products with home networking technologies,'' said Elizabeth McNichols, a Cisco spokeswoman.

Linksys President Charles Giancarlo talked about some of the possibilities at hand in December:

``We can tie together their media,'' he said. ``We can add in not only phone service, but . . . higher-quality voice. We need to bring stereo. We need to bring the ability to have your buddy lists on here. Push-to-talk capability, so you press a button and you can contact all the members of your family. Intercom service in the home. Unlimited lines to your home environment. Even video telephony.''

Giancarlo added that products to come would allow for music to stream off the Internet and play anywhere in the house, and for automatic wireless downloading of photos from cameras into computers and watching videos on any screen in the house, whether it's a PC, TV or other device.

It's all designed, he said, for ``just making life simpler for the average consumer.''


Contact Jessie Seyfer at jseyfer@mercurynews.com or (408) 920-5425.




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