Vegas baby: Cisco seeks consumer buddies

Cisco Systems CEO John Chambers is to deliver a keynote at the Consumer Electronics Show (CES) in Las Vegas today - signalling a push into unfamiliar terrain for the networking kit maker, better known for catering to Fortune 1000 companies.

Some people might be scratching their heads at the idea of the leader of Cisco showing up at a consumer gadget trade show. But given how consumer technology and entertainment are changing from isolated, discrete products to ones that are connected to each other and to the internet, Chambers' presence makes sense.

That said, however, Cisco executives say they're aware traditional companies catering to the consumer market might not know what to make of the internet networking giant intruding on their turf.

Dan Scheinman, senior vice president of Cisco Media Solutions Group, said: "I think historically there has been some tension between some of the networking/IT companies and the consumer electronic industry. Some of the vendors and media companies aren't sure if we are a friend or a foe. But we are here to tell them that we come in peace. And we think that through partnerships with them we can really grow the market into something that wouldn't be possible if we each worked alone."

Cisco has been preparing for a push into the consumer market for more than a year. Last year it closed the $6.9bn deal to buy cable set-top box maker Scientific Atlanta. It also unveiled a new logo and marketing campaign to help make it a household name. And the company has created a new business unit headed by Scheinman that will work with content creators to help build products that cater to the entertainment industry. Cisco has also continued to develop its retail presence with new products for its line of home networking equipment from Linksys.

Scheinman said when John Chambers takes the stage at CES, he will be delivering a message to the industry about Cisco's long-term commitment to the market. And specifically, he will be trying to convince the service providers, consumer electronics vendors and content owners Cisco can help them innovate and create demand for more products and services in the home.

Change is already on the way as consumers seek out more sophisticated products and services, Scheinman explained.

The market for TVs is a perfect example. For the first time since 1996, TV sales in 2006 outpaced PC sales, according to the Consumer Electronics Association. TV revenues generated $20bn in sales, whereas PC revenue generated $19bn in 2006. The main reason for this shift is the emergence of HDTV.

As more cable operators, satellite TV providers and phone companies roll out new high-definition programming, people are compelled to upgrade their TVs to more expensive, HD sets.

TV sales are just the beginning of this trend, Scheinman said. Digital video recorders have already begun teaching people to watch TV when they want instead of when their cable operator and the network television networks dictate they watch them. Devices in the home are also becoming internet-enabled, which means that a PC can communicate with a TV, which can communicate with a stereo to allow consumers to share digital content throughout the home.

Scheinman said: "We've been through this before. But instead of Sony and Disney, back then it was IBM and Hewlett-Packard. We know from our previous experience in the enterprise market that we created value for other companies within that ecosystem."

In the end, he said, the enterprise IT market grew stronger because Cisco helped these companies reach more end users or create new services that they wouldn't have been able to offer if they could not connect their applications to multiple users.

He added: "We think that phenomenon will repeat itself in the consumer market. A big market transition is underway as content is digitised and IP-enabled. And we want to partner with media companies, service providers and consumer electronics companies to help them prosper just as we've helped do it for the IBMs and HPs of the enterprise industry."

Marguerite Reardon writes for CNET News.com