On the day Cisco's purchase of wireless LAN equipment provider Linksys Group was announced, Victor Tsao, the former MIS director of Taco Bell who founded Linksys with his wife, Janie, 15 years ago, spoke with CRN Editor/News Steven Burke about the $500 million stock deal.
CRN: Why did you make the deal?
TSAO: In the last few months, we have been working with the Cisco team and we learned [about] the people there and the culture there. And we felt very comfortable. It is not like this is a company [mired in] bureaucracy and politics. It didn't really feel that way. %85 The synergy is tremendous. It is more than one plus one equals three. Linksys will have tremendous backing from a huge company like Cisco and a great brand like Cisco. And Cisco will have Linksys to complete the total loop of networking. It is a logical thing to do.
CRN: What kind of benefits is this deal going to bring the strong, loyal Linksys partner base?
TSAO: Cisco has a tremendous channel presence. I know they have more than 10,000 VARs in the states. They are very aggressive, very skillful. And so we definitely can work with them. In technology, Cisco is one of the very few American companies still doing R&D in the states. They have tremendous networking technology. They are customer-focused, focused on customer service and quality. Those are the kind of things we can learn from Cisco.
CRN: What is your response to Linksys solution providers who say they are concerned the deal will affect Linksys' aggressive price/performance?
TSAO: The Cisco and Linksys overlap is very, very small actually. Cisco is very focused on enterprise, government and service provider [sectors], and Linksys is very focused on consumer, home networking and SOHO networking. So we really are very big in [home networking] management switches, hubs and NIC cards. And Cisco is tremendous on the managed backbone enterprise gear. Our VARs and resellers shouldn't have a concern. In this case here, we really complement each other.
CRN: What kind of products might we see from Linksys in the next year that would play in the digital home?
TSAO: You'll see [something] this year. Actually back in January at the Consumer Electronics Show in Las Vegas we demonstrated a product with Intel. We partnered up with Intel on this wireless meter adapter that allows you to wirelessly transmit data from a PC kind of device to a TV and stereo set and play your images on your TV set %85 or [MP3 files on your] stereo. Those are the kind of products Linksys will bring to the marketplace at affordable pricing.
CRN: Will we see increased security capabilities in the Linksys line this year?
TSAO: Absolutely. For the existing products we are not going to do too much. For future products we will definitely start doing some planning now. We plan to definitely bring some provisions of Cisco technology into Linksys future products. In the meantime, we were doing a PBX certification with Cisco with or without this acquisition here.
CRN: What impact is this going to have on the home networking market?
TSAO: If somehow we can work with Cisco with some selective technology, we can make [home and corporate networking] seamless. We can make it autosensing. When I go home I [won't] have to worry about messing with different parameters. When I go back to work, Cisco will understand what is the best for me. That is a strong message for the consumer and any user.
CRN: Are we going to see a strong Cisco network product line ranging from the home all the way up to the enterprise?
TSAO: That is very clearly one of [Cisco Chairman and CEO John] Chambers' objectives.
He stated very clearly he wants to get into the consumer side. When you talk about the consumer you talk about home networking. %85 The Linksys acquisition will allow him to complete the whole loop.
CRN: How long did it take to negotiate the deal once you got down to it?
TSAO: A couple of months.