The Linksys Wi-Fi unit may once again be in the firing line as Cisco continues to streamline its operations as part of its ‘transformation project’.
The firm is to cut 2% of its global workforce, or 1,300 jobs, as part of a ‘limited restructuring’, but gave few details on where the axe would fall. The networking giant went through a radical rethink of its businesses and structure last year, which has started to deliver results in financial performance.
“We routinely review our business to determine where we need to align investment based on growth opportunities,” wrote Cisco spokesperson Karen Tillman in an emailed statement. “Additionally, we continue to evaluate our organizational structure as part of our plan to drive simplicity, speed of decisions and agility across Cisco.
According to Reuters, many of the cuts are falling in divisions which are seen as under-performing or non-core, including Linksys, Wide Area Application Services (WAAS), and Collaboration. Collaboration was mentioned in the last earnings call as a disappointment, while Cisco has always lagged Riverbed in WAN optimization, but significant cuts at Linksys would be more surprising.
It has survived several rumoured attempts to kill it, rebrand it or integrate it more tightly with other units. Last year, when Cisco announced its major push to retreat from its diversified model to its core competencies, Linksys looked to be a candidate for change, since its parent defocused almost entirely on consumer and end user products. For a while, it had put forward a vision of end-to-end IP, providing every element from giant routers to gadgets like the Flip camcorder (a 2011 casualty along with the Cius tablet and Umi telepresence offering). But amid suffering performance, CEO John Chambers reverted to the key strengths in IP networks and infrastructure, with the services that ride on top.
In that context, Linksys kept its name but was repositioned somewhat, taking on the role of providing the home hub which would give Cisco control of the domestic environment without having to own the end points. Linksys, it emerged, would stop making devices and focus entirely on the network itself. The unit’s general manager, Brett Wingo, said the division would place its resources into its gateways and routers, but also adapt those products significantly to mirror the changes in the home network and to take a more strategic and high value role.
As users start to create multiscreen digital networks allowing them to view video and access data from many devices round the house, this will enhance the role and value of routers as they become the control center for these multimedia systems, incorporating new technologies like HD quality Wi-Fi. Linksys’ router R&D has been heavily focused on products which can detect all the connected devices in the home and their capabilities, in order to decide on the highest quality routes for different types of content. The next step is to expand their role further, making them the main intersection between the home WLan and the service provider network.
The Linksys box aims to become the common point for every gadget in the house to connect to the outside world, rather than the current situation where each gateway, internet TV and home control box has its own internet link. Routers are “sitting idle and not doing things a lot of the time, and you can have them do more and you can run more services on them,” Wingo said in the interview. “The hardware that’s capable of moving video around the house or displaying software onto a screen … those types of things can be done in the router in a lot of cases.” And there will be increasing integration with Cisco’s cloud services and its CloudConnect framework for managing the home network.
This strategy was logical and fitted well with Cisco’s approach to small and large enterprise segments and to femtocells. But the company may be looking to pull back from the home market altogether, say some sources, and leave the home hub role to lower margin rivals or to tablets. The sources say Cisco has enlisted a consulting firm to advise it on a sweeping consolidation that could result in a series of so-called “limited restructurings.”
The whole plan is called the Transformation Project and is led by SVP Angel Mendez, with a brief to “deliver greater productivity, agility, and growth” by realigning the product and services portfolio, and operational capabilities.