Page last updated at 14:51 GMT, Friday, 12 June 2009 15:51 UK

Why Cisco has designs on your home

By Maggie Shiels
Technology reporter, BBC News, Silicon Valley

Cisco connected home
Cisco sees its consumer products as a multi-billion dollar business

The networking giant Cisco has declared video the next killer application.

That claim is backed by research that shows that by 2013, internet traffic will reach 667 exabytes and 90% of that will be made up of video.

The traffic, equivalent of 10 billion DVDs worth of information, would cross the internet monthly said Cisco.

"If this prediction holds true, it would take more than a half a million years to watch all the online video," said Larry Greenemeier of ScientificAmerican.com.

Cisco's study helps to explain the company's efforts to brand itself as a lead provider of what it calls "consumer experiences".

While the bread and butter of its $40bn in annual revenue come from the sale of routers and switches to big companies and ISPs, Cisco is keen to lay claim to new markets such as consumer electronics.

Its recent acquistion of Pure Digital, maker of the popular Flip video camera, has been seen as Cisco's most aggressive move into this area.

"We're just getting started," said Ken Wirt, Cisco's vice president of consumer marketing.

"Our aspiration for the consumer business is $10bn," he said.

"We have over $30bn in the bank. In the last 20 years we have made over 130 acquisitions and are looking to buy where it makes sense."

Other consumer-focused purchases included home networking firm Linksys. set-top box maker Kiss Technologies and TV equipment firm Scientific Atlanta.

Key trends

In early June, Cisco boss John Chambers told a conference that "video is the future and if you ask what excites me most, it's probably how video's going to change our lives - both personally and the way we work."

He said the Flip camera is the "future of the way people will communicate."

flip cameras
Flip has 24% of the US camcorder market, second to Sony

The company believes that the device will help it make video as common as e-mail across the internet.

Analysts agree that the focus on video can only be good news for Cisco's main business.

"I think their consumer strategy is excellent," Danielle Levitas, an analyst at IDC, told the BBC.

"In many ways I could be cynical and say it's all about the network capacity and traffic and that whole notion of pushing rich media over the web because this will ultimately support their core business."

Cisco's Mr Wirt describes its consumer approach as "systematic" and aiming to help consumers make more of their net links.

"Linksys allowed us to extend the network into the home. With Scientific Atlanta that was about extending service providers into the home with set top boxes. Pure Networks does software that lets you get devices connected to the network more easily.

"More recently we closed the acquisition of Pure Digital which lets you take your recorded video to your PC and let you share that in the home or other places and access it from multiple computers.

"Video is one of the key trends we see in driving change in people's behaviour." said Mr Wirt.

Cisco's visual networking index also showed that by 2013 there will be 11 billion square feet of screen space in the world from mobile devices to TVs to laptops to PCs. Placed end-to-end the screens would circle the globe more than 48 times.

"The number of screens can give customers, business and mobile users more access to data and particularly visual data," said Thomas Barnett, Cisco's senior manager of strategic messaging and communications.

"More screens and bigger screens will change how people use the network."

Cisco who?

Although well-known among businesses and in the technical community, Cisco is a relative stranger to the general public. But could struggle to translate that into consumer recognition

YouTube
Video is set to fuel massive growth on the web

"They are a well-respected brand, but just don't have the name recognition factor like an Apple or Sony or Microsoft," Mike Wolf, vice president of research at GigaOm told the BBC.

"There has been a history of difficulty for IP centric companies trying to make the transition into entertainment. A good example is HP and Dell when they tried to move into the TV business," he said.

"It just didn't really happen."

Mr Wirt acknowledged that while Cisco may not be a household name, its equipment is already in millions of homes.

"Most people don't think of Cisco as a consumer company but if you take all the devices we have installed in a consumer's home from set top boxes to cable modems and wireless routers it all adds up to 178 million over the years.

"Our history shows that while we might not be well known in the home, we have a lot of experience there. And now we are moving to the front with the Flip camera," said Mr Wirt.

Mr Wolf says the company's purchase of Pure Digital shows how serious it was about making a serious play for the consumer.

"I really think Cisco is committed to this space and very smart to be making these acquisitions," he said. "Pure Digital makes a lot of sense for them."

The one obvious gap that analysts think the company is neglecting is mobile.

"Competitively speaking, mobility is a huge factor in driving traffic and business and Cisco doesn't have much of a story there," said Ms Levitas from IDC.



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