Cisco to enter consumer market

The Internet backbone. Corporate enterprise networks. High-priced routers. These are the things most often associated with monolith Cisco Systems (CSCO).

But that could soon change.

In the first half of next year, the company will formalize a strategy to enter the consumer networking market by mobilizing a line of business around technologies that cater to homes and individuals, according to John Chambers, president and CEO of Cisco.

Cisco is currently divided into units focused on corporate enterprises, service providers, and small to medium-sized businesses.

Cisco is already laying a foundation for a consumer market play, with elements of ongoing Intel and Microsoft partnerships targeted at the typical residential user.

"Don't underestimate how far we already are in terms of adapting our technology for the consumer space," Chambers said in an interview with CNET's NEWS.COM.

The first examples of Cisco's move into the consumer arena are arriving in concert with partners. Cisco and Intel, for example, are in the midst of developing cable-modem technology to allow home users to surf the Net using the high-speed infrastructure normally associated with television.

Intel's cable modems will use Cisco's reference design implementation. The two giants are also working on set-top box technologies for Net surfing using the television set, security enhancements for desktop connections, and enabling easier use of multimedia technology--a bandwidth gobbler--on a network.

Cisco is also working with Microsoft to add, among other things, more networking functions to that company's operating systems.

Analysts said Cisco's move into the residential market is only natural since the consumer user at one end requires heavy-duty networking gear at the other to surf the Net.

Martin Pyykkonen, networking analyst with Furman Selz, said, "What you want to make sure happens is that more people connect to the Internet. Anything Cisco can do to help that has a direct benefit for them."

Chambers said the company, in typical Cisco fashion, would start with a short list of expectations to test the market once the organization is formally announced. The move is intended to essentially shore up the last remaining area of market focus in networking-related products for Cisco.

The company has already moved to prop up an initiative to sell simplified networking gear to small businesses--an environment dominated by 3Com and a sales channel with which Cisco is generally unfamiliar. Cisco said the sheer size of the market and the opportunity necessitates a move into the space.

The small-business segment grew close to 50 percent quarter-to-quarter in the most recent period, showing that Cisco's attention to small businesses may be paying dividends, according to the company.