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Cisco has sold off its Scientific Atlanta service provider customer premise equipment – or set-top box – business to French supplier Technicolor for $600m, bringing to a close its decade-long participation in the consumer video market.
The networking sector lynchpin ploughed into the consumer video market after CEO John Chambers, in a rare blunder, became convinced that it was the future for the company and invested not only in the Scientific Atlanta set-top box unit but also Pure Digital, makers of a now largely forgotten video camera called the Flip. Cisco also launched its own consumer telepresence product called umi, which was also a commercial failure.
Cisco’s incoming CEO, Chuck Robbins, said he meant to “accelerate areas” that he saw as critical to Cisco’s success, make strategic changes where necessary, and “drive greater simplification and clarity” in the business.
The sale of the set-top box unit to Technicolor – formerly known as Thomson – gave the business a secure home for the future, he explained, and allowed Cisco to re-focus its investments on cloud-based video.
The two companies will also sign a strategic partnership to develop and deliver next-generation video and broadband services, said Cisco SVP and head of business development Hilton Romanski, who is now taking up a board position at Technicolor in addition to his Cisco responsibilities.
“The strategic partnership agreement with Technicolor will also ensure Cisco remains close to this business and our service provider customers. The proposed transaction will allow both companies to accelerate our investments in our respective strategic priorities, while working together to deliver value to the market,” said Romanski.
Cisco said it expected it would take a hit of approximately $1.8bn to its annual revenues as a result of the sale, but insisted the impact on its bottom line would be negligible.
More room for the IoT
At the same time, Cisco announced a number of changes to accelerate its momentum in the internet of things (IoT) and cloud sectors.
Robbins explained that having “incubated” both cloud and the IoT in separate silos, it would now bring them together, unifying the IoT and cloud engineering practices into its engineering organisation, the two services practices into its services business, and sales into its worldwide sales teams.
“These changes will allow us to scale these businesses as we see increased customer engagements globally,” he said.
Robbins, who has already shaken up Cisco by passing over a number of key senior staffers for roles in his new boardroom, said he would continue to work to prioritise the supplier’s portfolio and investments. This may result in further job losses, he added.
“Part of this on-going prioritisation is ensuring we have the right talent in the right places to drive our strategy and our growth in a very fast-paced market. Some functions and geographies across Cisco are making very focused changes to quickly re-align our investments to the top opportunities. A limited number of our employees will be impacted,” Robbins said.