Cisco is not dumb
Om Malik, Mike Arrington, and others have been harshing on Cisco’s recent acquisitions in the social networking space, and have implied that Cisco might want to be the next MySpace. They’re off the mark, for a few reasons.
First of all, Cisco’s acquiring technology assets (and software employees) on the cheap. It’s not buying consumer brands that it plans to extend. If Cisco wants to play in a new space, then it makes a large splash. So if Cisco bought Facebook, then you’d have a potential argument. But it didn’t. It spent next to nothing to buy enabling software. Compare this to its Scientific Atlanta purchase, and it’s not hard to see where the company’s priorities lie.
Second, Cisco’s Media Solutions Group is tasked with building relationships and selling all types of integrated services to media companies (both content owners and distributors). It’s not strange to think that they’d want access to an interactive feature set to drive discussions with these folks and to enable similar internal discussions…it’s certainly an improved form of dialogue.
Third, Cisco is definitely moving into the consumer space, but not to build a website (per se). Cisco has two grand ambitions in the near future: to enable internet delivery of video and to build a consumer electronics presence.
If and when internet-delivered video takes off, Cisco stands to reap massive massive rewards by selling new equipment to pretty much everyone in the distribution network chain. It will be a tremendous upgrade. Btw, this includes IPTV, movies on demand, and user-generated video. All of these will drive uptake for Cisco products. So Cisco has been making investments in folks like Akimbo to help move thing along. I expect them to get more aggressive and more acquisitive (if they don’t buy Tivo, they’ll do something similar). Anyways, to make a long story short, the core problem keeping this evolution from flourishing is the content owner’s concern regarding file-sharing (think ReplayTV, and now YouTube), and the end game for Cisco is to enable network providers (cable/telco/wireless) to build walled-garden type services that allow users to download video and share them within the confines of a defined and controllable social network. So the way I see it, Cisco should beef up its video-based social networking technology big-time, to provide network operators with an end-to-end solution for internet video delivery that can be supported by old school content companies. Why? Because even if the network operators can’t deliver on this promise, they’ll spend a ton of money trying.
Meanwhile, Cisco has not been quiet about its intentions to bulk up its CE presence, beginning (but only beginning) with Linksys. They’ve quietly networked DVD’s and other non-router devices to their product line, but Cisco knows the real money is in cracking the personal network that binds portable devices to devices in the home, like TV’s and PC’s. Remember the ballyhoo over “convergence” in the early 00’s? Working on broadband-related stuff at AOL Time Warner at the time, I certainly do (btw, don’t get me started). Well, back then there was an accepted worldview that the main batteground for the home was filled with the CE camp on one side (Sony) and the PC camp on the other (MSFT). But everyone knew Cisco wanted to play in this space somehow (it made too much sense for them not to).
So the c-word has been a dirty word ever since the bust, but the notion is emerging again, only this time things are a little different. Back then, the personal network was very much a silo concept - we assumed users wanted to access their personal or purchased stuff across their own devices. But today, the concept of personal networking has more directly embraced the concept of social networking - users demand sharing capabilities, and the user-generated craze has led to a bi-directional flow of content. So….if Cisco really wants to offer multiple devices in the home that allow for multimedia access and sharing, it will have to move up the stack and offer compelling web software and services that integrate seamlessly with its hardware systems, and those services will ultimately need to be social in scope. Apple has certainly killed any doubts that integrated hardware/software experiences are the future, and the leapfrog from today’s iPod to tomorrow’s will likely be based on social connectivity, not just personal connectivity.
Ultimately, Cisco’s social software game is just beginning. And don’t bet against them, cause they’re not dumb.

March 5th, 2007 at 12:14 am
Best post on this topic so far.
You’re right, they did get technology assets on the cheap. And with 20-plus billion in the bank, I”m sure the two social networking acquisitions put nary a dent in Cisco’s wallet.
I like the “move up the stack” perspective on their plans in personal networking. This company has always been a cash machine. Remember when it was predicted to reach the first trillion dollar market cap? May not reach that … but I think it knows where things are heading, and plans on being at every money making turn in the road.
March 5th, 2007 at 12:06 pm
[…] Paidcontent gives some juicy quotes from Ning’s, Mark Andreessen, who questions whether or not Cisco can handle the truth when it comes to integrating disparate social network systems. According to Zimbio’s, Danny Khatib, CISCO is not dumb. CISCO is merely positioning itself to add front end tools to its hardware as the company positions itself for the future of Internet TV. This reminds me a bit of what Don Tapscott predicts in his book, Wikinomics. Companies, like CISCO, changing business models as they realize that servers and operating systems are giving way to customer experience as the main drivers in the value chain. […]
March 5th, 2007 at 4:26 pm
[…] Rafat Ali recently discussed Cisco’s acquisitions of Five Across and tribe.net for their social networking technology. This was panned by some of the web 2.0 pundits. Rafat invented an interesting new word as he said the pundits were harshing Cisco, but perhaps that was a typo. However, Rafat pointed to a reasoned argument for the wisdom of the purchase by Danny Khatib. Danny’s post, Cisco is not dumb, makes a lot of sense to me. I think his most important point can be summed up in this excerpt: […]
March 6th, 2007 at 2:27 am
[…] Cisco is not dumb - Deluzions of Grandeur “Cisco’s acquiring technology assets (and software employees) on the cheap. It’s not buying consumer brands that it plans to extend.” (tags: internet socialmedia socialnetworking cisco tribe m&a) […]
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