Linksys Plugs Back Into Cable


Going from privately held firm to a property of Cisco Systems Inc. is no minor switch, but so far Linksys Corp. has maintained its identity — and has weathered the process more or less intact.

The maker of networking gear re-emerged at the National Show in Chicago last week with a pair of new products and a shift in its marketing aim, focusing more on mainstream broadband users.

Earlier this year, Cisco said it would acquire Linksys in a $500 million stock deal that is expected to close by year-end. But unlike the 80 or so other acquisitions the technology giant has swallowed over the past few years, Linksys will remain as a separately operating subsidiary, said director of broadband services Matthew McRae.

"I can't tell you how many people came up to me when the deal was announced and said 'Yeah, sure — a separate operation,' " he said. "But it really is."

Separate, but apparently not completely disconnected. While the two organizations will maintain stand-alone sales channels, product-management groups and design teams, there will be some opportunities for crossover technology feeds from one company to the other.

"We will choose the things that will be strategically beneficial," McRae said. "What is great is, the choice is up to us. Cisco isn't pushing down."

Linksys plans to hit the market later this summer with two new products aimed at extending home networking beyond just multiple PCs. That includes the Wireless B Media adapter, a device that links to the main gateway, specializing in shipping photos and digital audio files via an 802.11B connection.

The product is aimed in part at a growing base of digital-music customers, who now have access to download services offering songs at less than $1 apiece.

"Now, here is a way to tap into that song you just paid 99 cents for and listen to it anywhere in the house," McRae said.

To get around thorny digital rights-management issues, the router does not actually store the data, but rather draws it from hard drives connected to a home network. A later version will add video file capabilities, supported by an upgrade to the 802.11G wireless home-networking standard that can to fire off up to 54 Megabits per second in data.

"[802.11]B is fine what we are doing today, but when we upgrade to video, we will need 802.11G," McRae noted.

Linksys will also release a new wireless, Internet-protocol addressable Web camera that can render live video at between 10 and 20 frames per second, compared to the standard of five frames per second for other devices. With a motion-detector feature that sends an alert when movement is detected within camera range, the Wireless-B Internet Video Camera is aimed at the home surveillance or "nanny cam" market.

Web cams are becoming more common in households, but McRae said the problem so far has been they are too costly for a quality unit and too difficult to install.

"We waited until the set-up was going to be really, really easy to debut this product," he noted.

That ease of installation reflects the fact the market is moving toward more mainstream home networking users. Thus, Linksys is now refocusing on more of a service model, marrying its products with a provider's home-networking service.

Working with cable operators isn't anything new — before it was acquired by Comcast Corp., AT&T Broadband and Linksys had struck a marketing deal to sell home-networking gear via a Web site to cable-modem customers.

That deal is now going to change, given the market shift and Comcast's home-networking philosophy puts more emphasis on combined gateways that marry the access point with router functions, rather than just hawking stand-alone routers.

"That's why the service provider channel is so vital for Linksys," McRae said. "We know Linksys is moving toward that early mass market."