Cisco’s Linksys goes for global growth

Cisco’s Linksys goes for global growth

Despite selling her business for $US500 million, life carries on as before for Janie Tsao. She still claims a modest lifestyle and maintains a 100- hour working week.

Janie and husband Victor co-founded networking company Linksys some 14 years ago in a garage in California. After building it up to generate annual revenues of $US400m, a need for venture capital led to the compnay being bought out by Cisco a year ago.

Janie was in Australia recently to oversee the continued expansion of Linksys, now operating as the consumer division of Cisco, as the firm aims to become less US-centric. Currently, the US generates 95 per cent of its global income.

Linksys began its Australian operations nine months ago, initially using Cisco staff, including its salesforce. Now, Linkys has its own distributors — Tech Pacific, Ingram Micro and Multimedia Technology — plus its own channel managers who can still call on further back-up from Cisco.

Linksys now claims hundreds of resellers and tens of thousands of customers.

Janie, who is vice-president for worldwide sales and business development, said the Cisco takeover was a good match, allowing her company to use the infrastructure and technology of its parent.

Furthermore, there was no conflict or overlap at the channel level. Cisco routers were for corporate users, whereas her products were for the home and small business markets.

“The [Linksys] business model is totally different to Cisco,” she said. “We are an absolutely independent division. The autonomy, channel focus and support to user groups remains as before, except we do have the benefit of taking some of the (Cisco) technology as we see fit.”

Regional manager for Linksys A/NZ, Brian Allsopp, wouldn’t give local sales figures, but claimed it was growing at an annual rate of 35 per cent in what he estimated was a $100 million market for home and small business networking products.

Linksys aims to be the number one such provider within two years by using its own staff, plus those of Cisco. Allsopp claimed resellers and distributors had told him that Linksys margins were higher than those of its rivals. Aggresively expanding its local reseller base would be critical in attempting to become market leader in the home networking space, he said.

Linksys had new products coming out, including products for VOIP, wireless, mobility and security, Allsop said.

The modern Linksys is a long way from the time when Tsao was systems manager for a US retail giant and a partner invited her to become involved in developing electronics. This led to her working part-time in her own garage creating a modular device that allowed data transfer so PCs could share a printer using telephone lines.

Eventually, Tsao worked on these data connectivity products full-time, persuading retailers to stock her products, leaving the garage for an office after about five years.

From 1996, Linksys began to grow rapidly, doubling in size every year, claiming to create the SOHO router market in 1999, with wireless products following in 2000.

However, the company lacked venture capital, which led investment company Credit Suisse First Boston to introduce Linksys to Cisco.

“It was a good synergy,” Janie said. “Cisco has the products that deliver to the home. We deliver inside the home.”

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