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Cable/Video

Cisco Takes On New Media

SAN JOSE, Calif. -- Its "New Media" obsession is still a bit vague, but Cisco Systems Inc. (Nasdaq: CSCO) is apparently happy with what it's seeing so far.

In a brief talk at the company's C-Scape analyst conference here Tuesday, Dan Scheinman, the senior vice president running Cisco's Media Solutions Group, outlined Cisco's progress in the world of Web 2.0 technologies.

A lot of it comes down to the ways in which media companies can use social networking as a key component of their interactions with consumers. Cisco hopes that what it's learning in this area can be distilled into the kind of repeatable, automated processes that then translate into a real business opportunity.

So far, Cisco's just dabbling. Following the acquisition of Five Across earlier this year, it's been using social networking sites designed for Nascar and the National Hockey League as alpha tests, partly to learn from the way those sites are used. (See Cisco Gets Social.)

Cisco's vehicle for building community-minded sites like these will be the Entertainment Operating System (EOS), an open software platform announced by Cisco in October and due to hit the streets in 2008.

Scheinman's talk yesterday focused less on clients such as the NHL and more on the media companies. They've lost control of the user and need to rethink how they're going to find fans for a movie, a singer, or a TV show, believes the Cisco man.

"Because of digitization, you've got business models being destroyed," he said. "The media companies need a partner... to figure out how to work through this transition, how to connect to this empowered user."

With the Nascar and NHL sites, Cisco thinks it's beginning to learn how to navigate this world, Scheinman said.

The media business has already revealed some surprises to Cisco. When music "artist" Kid Rock got a page on the NHL fan site -- he likes the Red Wings, apparently -- it drew 22,000 fans in one week, Scheinman said. Kid Rock's label, Warner Bros., realizing it had a new conduit to some of his fans, started launching music videos on the NHL site.

The NHL has now gotten a handful of bands to similarly use the site as a marketing vehicle. It's "a connection that no survey would ever have known to exist, but in fact was found because the NHL guys were willing to experiment," Scheinman said. "Our hope is that we can... automate this, and make this more routine."

Even if Cisco is learning all this great stuff, why should it be the one to provide Web 2.0 technologies? Scheinman argued that it's an extension of Cisco's other work. Media companies want a partner that can help them deliver information, which Cisco already does. The next step they'd like is to create "a world where content can find you" -- something at which, apparently, Scheinman's Media Group expects to excel.

— Craig Matsumoto, West Coast Editor, Light Reading

douaibei 12/5/2012 | 2:57:27 PM
re: Cisco Takes On New Media Cisco is a quite interesting company, they boost the world wide web with unique position in IP.

cisco are taking more investment into the service and application area. Several big service acquistion happened in the last three years, the latest financial result show that cisco is walking away form the Network infrastructure, less than 35% revenue came from the traditional business.

recent restructure looking even interesting( ref. to networkworld), cisco seems to focus on the software part of the networking rather than the hardware part.

cisco compete in with microsoft, avaya, nortel in unicom market, and a lot of effort seems to focus on the pure application side and leverage the open archicture.

I do believe cisco will changed to a consumer electronic manacture or a software application provider.
spelurker 12/5/2012 | 2:57:26 PM
re: Cisco Takes On New Media "I do believe cisco will changed to a consumer electronic manacture or a software application provider."

No.

Do not mistake diversification with "walking away from the core business". I can tell you from seeing Cisco's actions on the ground that they are fighting tooth & nail for the network infrastructure business. What Cisco sees is that the market share they can get from the network infrastructure business has peaked, and they need new growth engines.

They would not have bought Scientific Atlanta if they were backing away from the big iron business. SA is one of the largest sellers of video infrastructure equipment (in addition to those settops etc.) and the purchase was part of a broader play into video services market. This is what they see as their growth market in the near term.

To compound this, their sales strategy has been to build a "Cisco infrastructure" model, so purchases of one product (regardless of the business sector) enhance the chances of buying network iron from them because of symbiotic features.

Application software is a tiny piece of the pie, and doesn't make a big dent for quite some time.

CEM might sound nice in theory, but they've had Linksys for years, and it's a one-trick pony. Yes, they will *try* to grow in that space, but their prospects for success are limited. I'm quite sure John Chambers isn't putting all of his chips onto that bet.

WRT the focus on the software side of networking, this is part of the maturation of the market -- as companies like Huaweii & ZTE grow, Cisco uses their software features as "value added services" to keep their market share and margins bolstered.


materialgirl 12/5/2012 | 2:57:26 PM
re: Cisco Takes On New Media Good points, db.

Now the question becomes how they can compete with the YouTubes of the world, and with the general focused-chaos of the net, to become the best media outlet solution. Then, they will have to figure out how to mutate their solution on a constant basis to keep up with the outside world, and (more challenging), how to get their stodgy media customers to adopt those constant changes before they become yesterday's story. No mean feat, but at least they are trying. Somebody has to do it!
prs6str 12/5/2012 | 2:57:24 PM
re: Cisco Takes On New Media Not sure why anyone would suggest Cisco is walking away from anything. As spelurker said, they are a large company and need to enter new large markets to keep the percentage growth there...that's all.

I think they are announcing this software thing simply because everyone thinks of them as a hardware company when most of their engineers are actually software engineers. And, in recent years, they've compiled quite a number of software offerings, so it probably makes sense to consolodate them and have that group act more like a pure sw company. And besides, sw is usually where the margins are anyway.

It's just smart business as far as I can tell.
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