Cisco to sell Linksys to Belkin, will exit home networking market

Belkin has struck a deal to buy Linksys from Cisco, bringing Cisco's 10-year dalliance with the consumer networking market closer to an end.

Cisco's Linksys division sells routers and wireless access points to consumers, which is in line with Cisco's overall focus on networking gear but diverges from the company's core focus on selling to big businesses rather than home users. Cisco has been gradually stepping out of the consumer business—for example, by killing off the Flip camera line and Umi home videoconferencing.

Cisco recently engaged Barclays to help sell off the home networking division. Belkin's purchase of Linksys is expected to close in March 2013, but the companies did not reveal the purchase price. Cisco bought Linksys in 2003 for $500 million.

Existing customers don't have to worry about whether their Linksys products will continue to be supported, Belkin said in its announcement. "Belkin intends to maintain the Linksys brand and will offer support for Linksys products as part of this transaction," Belkin said. "All valid warranties will be honored by Belkin for current and future Linksys products. After the transaction closes, Belkin will account for approximately 30 percent of the US retail home and small business networking market."

Belkin's existing business includes wireless and wired networking products as well as an assortment of device cases, mobile accessories, cables, and audio and video products.

Cisco's stewardship of Linksys annoyed some users (including me) last year when certain routers were automatically linked to a cloud-based management service that was less functional than the traditional, local router management interface. (Cisco backpedaled after an uproar.)

Belkin said it will expand Linksys's market presence, hinting that Linksys products will somehow be linked to or sold alongside Belkin's WeMo home automation platform. Besides home users, Belkin wants to use Linksys to target service providers and small businesses.

While no purchase price was announced today, Bloomberg reported last month that Linksys is "likely to fetch much less than the $500 million Cisco paid for it in 2003 because it is a mature consumer business with low margins."

Although Cisco is selling Linksys to Belkin, it will maintain some ties to the business as part of a cross-marketing deal. "Belkin and Cisco intend to develop a strategic relationship on a variety of initiatives including retail distribution, strategic marketing and products for the service provider market," Belkin's announcement said. "Having access to Cisco’s specialized software solutions across all of Belkin’s product lines will bring a more seamless user experience for customers."