Cisco buys Linksys


— 12:59 PM on March 20, 2003

C|Net is reporting that networking giant Cisco has bought Linksys for a cool $500 million in stock. Cisco will apparently operate Linksys as a division and continue to sell consumer products under the Linksys name, though these products can now benefit from a trickle-down of technology from Cisco's high-end networking hardware.

"This acquisition supports our vision to drive innovations into the consumer market and create next-generation home networking solutions," Charles Giancarlo, senior vice president and general manager for product development at Cisco, said in a statement.
There's really nothing stopping Cisco from making consumer networking products under its own name, which makes the Linksys purchase a little odd. If Cisco does intend to use technology from its high-end networking gear in cheaper consumer products, why would it do so under the Linksys name?

Cisco has sold consumer networking products in the past, but those products have been expensive. With the Linksys name and cheap mainstream parts, Cisco may be trying to buy a piece of the consumer networking pie without diluting the premium status of its high-end networking gear.

   
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