Cisco Sells Linksys to Belkin

Cisco's Home Networking Business Unit, which includes Cisco's Linksys business, will be acquired by the consumer and small-business networking, storage and electronics provider Belkin. The latter is hoping to expand its reach through this planned acquisition.

Cisco is one of the more popular brands in the consumer and SOGO wireless networking business, and the acquisition will be beneficial for the Playa Vista, California-based company. A 30 percent share of the U.S. retail home and small-business networking market will also be a gain for Belkin.

The manufacturer of wireless routers, network video cameras, switches and related equipment, Linksys, has had a difficult relationship with Cisco mirroring other consumer-facing products which have been carried by Cisco in the past.

In 2003, Linksys was acquired by Cisco for the sum of $500 million in order to make what was termed by the company to be a fast-growing home networking market.

Additional acquisitions were also made in the consumer IT space. A $590 million acquisition in 2009 of Pure Digital (a maker of the then-popular Flip video cameras) is included in this list of additional acquisitions. The Flip video line was dismantled by Cisco two years later.

In May 2011, rumors started emerging that Linksys was for sale, following the closure of the Flip video camera business by Cisco. The Umi personal telepresence offering was also ended.

In December, bankers were hired by Cisco to help with the selling of Linksys.

According to Belkin, as part of the transaction, the Linksys brand will be kept and will offer support and honor warranties for Linksys products. The cost of the acquisition has not been disclosed, but the purchase is expected to close in March.

The vice president of corporate business development at Cisco, Hilton Romanski, revealed the planned sale of Linksys to Belkin, but did not offer comment regarding Cisco's struggles in the consumer IT market.

Working in conjunction with one another, Belkin and Linksys will be able to create a world-class consumer networking technology provider. Romanski wrote: “Linksys will enhance Belkin's capabilities to meet the needs of OEMs, as well as provide access to a large user base. 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.”

Romanski added: “Linksys has long been an important member of the Cisco family and we are confident that we have found the best buyer in Belkin. We look forward to witnessing Belkin's growth as they bring Linksys into their family.”

The senior director of product management for Belkin's networking business, Mike Chen, stated that the acquisition will be beneficial for Belkin, allowing it to develop new innovations and make the most of market opportunities in the small business and home networking market.

Chen said: “Our goal is to keep both brands in the reseller and consumer channel. We will enter into a strategic relationship with Cisco, which could include reseller and distribution channels.”

There exists some product overlap between Belkin and Linksys, and they both cater to varying requirements with regards to their consumers. Chen states that Belkin will be able to take advantage of this and can address a wider market than it was able to in the past.

Chen said: “Linksys has been connecting consumers to more powerful wireless networks for business, from home to small business solutions. Belkin has focused on customizing user needs for home network solutions.”

Both brands can be utilized by Belkin as a result of the acquisition. This will allow the latter to develop technology that will benefit users for next-generation networking. Chen added: “Consumers around the world are increasingly connecting with each other using smart phones and tablets. This creates a need for technology to help consumers keep in touch through their mobile devices.” (CY) Link