Who Should Buy Linksys? And How Does the Cloud Fit In?

Publisher's Outlook

Who Should Buy Linksys? And How Does the Cloud Fit In?

By Rich Tehrani, CEO, TMC  |  January 25, 2013

This article originally appeared in the Q1 -2013 edition of Cloud Computing Magazine.

Cisco recently appointed Barclays to help it auction off Linksys (News - Alert) – consistent with the company’s move to exit low-margin consumer businesses as it looks to invest in high-margin areas like software and services. But as the saying goes, one man’s garbage is another man’s gold. Linksys is indeed a treasure to the right partner like Google (News - Alert) or even Samsung.

The reason is simple – both companies need to blunt the move by Apple into the home and entertainment is the future of technology as consumer technology trends coupled with BYOD turn into corporate success. When the iPhone first came out, CEO after CEO explained to me patiently about how they could never abandon RIM and that the iPhone would never be secure enough for their IT departments to sanction.

Well, that was a short wait as a few years later RIM is gasping for air and even mighty Microsoft (News - Alert) is trying to figure out how to get people to buy its mobile products.

As Apple invades the living room further with its rumored new TV solution – whatever it may be, the defensive strategy of its competition has to be to get into the home via an adjacent method and leverage this success with add-on solutions. Of course the acquisition of Scientific Atlanta by Cisco coupled with Linksys was, in theory, going to do the same thing except the cable and telecom companies stood in-between Cisco and its customers meaning the leading networking company wasn’t going to come out with an OTT television solution.

The question is – who should buy Linksys and the answer to me seems that anyone who needs to compete with Apple. Aside from Google and Samsung (News - Alert), let’s be sure we add Microsoft to the list as well. Imagine what they can do with Linksys and Skype integration – coupled of course with Lync and Xbox. This combo would certainly make the company even more powerful in the world of VoIP/IP communications.

Then there are the cloud vendors – there is a natural fit between products and services these days – and Amazon has shown us that software can and will subsidize hardware. In its case, a suite of cloud services and apps are there to increase consumer spending on products in the Amazon ecosystem.

Google with its Chromebooks gives away lots of cloud services in the hopes customers will buy more. Expect this trend to extend across hardware in general meaning companies like Carbonite and Mozy may look at Linksys as a way to get consumers to use their services on a trial basis.

In a way, both of these companies can justify the purchase of Linksys by subsequently cutting their marketing budgets as the sale of each router and other consumer electronics product bundled with a free trial is effectively the same as the result of advertising on radio, TV or the web.

Finally, there is Dell and HP. I can’t imagine either company successfully pulling off such a merger but the synergies between consumer printing, computing and networking are too obvious to ignore. Moreover there is a slew of Asian vendors – many in China that could take the Linksys brand and use it to introduce a number of new products, which would have immediate name recognition in the U.S. Lenovo (News - Alert) leveraged IBM at first to do something similar – I imagine in my scenario, a Chinese manufacturer renaming itself as opposed to the other way around. Of course the U.S. government may have something to say about such a move from China but then again being a consumer play, Linksys may not get much attention from the feds looking to keep our communications networks safe.

Either way the biggest opportunity for growth for Linksys seems to be the melding of hardware with cloud services such as storage, audio and video. Apple and Amazon are pulling this off brilliantly and it seems to me the future of commodity hardware will be using it to push a surrounding ecosystem. In a way consumers can thank the cloud for adding more value to the products they buy and for its ability to subsidize hardware in order to make upfront costs more attractive.

Edited by Brooke Neuman
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