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Cisco Acquires Linksys for $500M


*Cisco acquires Linksys for $500M*: This acquisition is a clear win for Cisco, which can sell up and down the horizontal chain to consumers (which they've never really sold to directly, only through partners like DSL providers), small businesses, and their traditional enterprise market.

First published March 20, 2003 at the Wi-Fi Weblogger. This is reprinted with permission from the author.

Glenn Fleishman is the editor of wi-fi.weblogger.com and a freelance journalist.

Cisco's closest competitor in the enterprise wireless LAN/home Wi-Fi space has really been Proxim: Proxim can compete on features and the kind of customers, but not the installed base. Proxim, through mergers and product acquisition, has the largest consumer base outside of Linksys, but it also can serve enteprises through several products in WLAN area, and, because of their merger with Western Multiplex, has a rich portfolio of point-to-point systems, including gigabit point-to-point.

Even with the tech downturn and Cisco's remarkable write-off two years ago, the company has a market cap of $100 billion. Cisco has a varied portfolio, however. Proxim, focused on wireless now, has a market cap of just $91 million. That's not a misprint. It's clear in hindisight that Cisco would have been choosing between Linksys and Proxim, and chose Linksys.

In discussions with many in the industry in the last year, it was clear that the coming WPA (Wi-Fi Protected Access) and 802.11i, which would put certain enterprise-style network authentication features into every Wi-Fi access point, meant that simultaneously, every AP is now ready for the enterprise, even in a small way. Several WPA or 802.11i-compliant Linksys AP for $100 could provide much of the functionality needed by a business with 50 to 500 employees with an IT department that knew how to run an 802.1x system with their RADIUS server.

Cisco has a history of dealing well with its acquisitions: Linksys won't suddenly raise prices, cut quality, or shift its focus. Instead, we'll see more of a product line from bottom to top, and, as I said in a previous day's postings, the attitude still prevails that nobody was ever fired for buying a Cisco.