Cisco has big plans for its home networking business, so Linksys's founders will make way for a new suit

May 11, 2006

2 Min Read
Cisco's Linksys 'Outgrows' Founders

The original founders of Cisco Systems Inc. (Nasdaq: CSCO)’s Linksys home networking division, Janie and Victor Tsao, have stepped down to make room for a new general manager. (See Cisco Names Linksys Head.)

Replacing the Tsaos in the role of Linksys GM is Mike Pocock, who comes from the CEO spot at Polaroid. Pocock has done executive stints at a long line of consumer electronics companies like General Electric and Xerox Corp. (NYSE: XRX).

Linksys is now one of the top five residential gateway vendors worldwide, with a strong global presence, especially in North America and Europe, says Heavy Reading senior analyst Graham Finnie in a February report.

Along with Scientific-Atlanta Inc. , Linksys is Cisco's ticket into the home networking and home entertainment space.

The leadership change-up underscores Cisco’s big aspirations for the Linksys division, which it hopes will soon be a multibillion-dollar business. Right now, Linksys is flirting with a consistent $250 million in revenue per quarter.

One of the ways Pocock and company will try to scale the company is through increasing direct relationships with service providers. One such arrangement, which started before Pocock's tenure, is Cisco's recent deal with T-Online International AG , a division of Deutsche Telekom AG (NYSE: DT). In that deal, Linksys will provide Microsoft Corp. (Nasdaq: MSFT) TV-ready set-top boxes for new triple-play deployments in France, Spain, and Germany. The device, called the (KiSS) T-Home X 300T Media Receiver, receives high-definition IPTV and features an 80-gigabyte personal video recorder. (See T-Online Reports Q1 .)

The portfolio of one of Cisco's other acquired propeties -- KiSS Technology Inc. -- at the time of its July 2005 sale to Cisco, included such things as DVD and DVR players rigged with connections to receive broadband content streams. (See Cisco KiSSes Up to Telco TV.)Cisco spokeswoman Karen Sohl says Linksys will also optimize its products for VOIP. It has already launched VOIP hardware and software bundles with Vonage Holdings Corp. (NYSE: VG) and EarthLink Inc. (Nasdaq: ELNK) through retail outlets. (See Earthlink, Linksys Team.)

The Tsaos started Linksys in a garage in 1988, grew it steadily, and eventually sold the company to Cisco in 2003. Linksys is now Cisco's primary home networking equipment business.

The Tsaos will stay with the company and focus their attentions on drumming up new business in China, Sohl says. The couple will continue to report to Linksys president Charlie Giancarlo, according to a statement released Thursday.

“Janie said at an employee meeting a few days ago that there comes a time when your company just outgrows you, and you have to have people with the skill sets needed to take it to the next level,” Sohl tells Light Reading.

— Mark Sullivan, Reporter, Light Reading

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