Cisco has got the consumer market all wrong


Cisco has got the consumer market all wrong

Another quarter, and another set of disappointing results from Cisco, which did its best to spin its results positively, but couldn't disguise some serious problems.

The big issue for many is the firm's consumer business, which saw a precipitous 15% drop in its sales, with the Flip video lines disappointing and its recently launched Umi video kit not getting much traction.

CEO John Chambers has been very enthusiastic about the consumer business in the past, but on last night's quarterly conference call bemoaned the fact that consumers weren't buying the equipment that Cisco wanted them to.

"We based our strategy on being able to sell added value on an architectural play in the home. As you saw in the most recent holiday season, value add higher end products got crushed and the ability to move was mainly on lower SKUs.

"So it turned out to be a tougher market than we anticipated and this last six months in particular, the things that are most important to Cisco than being able to sell are key, were not what the customers were buying."

This is quite a telling statement, and to us it says that Chambers has got it wrong.

It simply doesn't matter what Cisco thinks it is most important to sell, it is the end-users that call the shots, and if they don't like Cisco's offerings (let's face it, Umi is stupidly overpriced) then they will go elsewhere.

Architectural plays are all well and good, but the average home consumer doesn't grasp it. Cisco is approaching consumers as if they were businesses, and that is a truly ridiculous strategy.

The fact that Chambers doesn't seem to get this should be of grave concern.

Cisco's consumer strategy needs a serious shake-up, and the quiet announcement that it has dispensed with the services of business unit head Jonathan Kaplan would seem to be the first sign that there's an axeman loose in Cisco's HR department.

This was first published in February 2011

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