Cisco Misses Its Own Point

Fools agree that Cisco (Nasdaq: CSCO  ) is one of the best stocks of 2009.

And not because of its consumer appeal -- it doesn't have any. But CEO John Chambers hopes to change that at next month's Consumer Electronics Show in Las Vegas. There, the New York Times reports, the networker will roll out a series of entertainment products, including a wireless stereo system.

Crazy? Maybe. The consumer electronics market is dominated by big names such as Sony (NYSE: SNE  ) , Philips Electronics (NYSE: PHG  ) , and Harman International (NYSE: HAR  ) . And those names are under attack from other big tech brands. Microsoft (Nasdaq: MSFT  ) is streaming video to the Xbox with help from Netflix (Nasdaq: NFLX  ) . Nintendo (OTC BB: NTDOY.PK) is working on Wii TV.

Cisco, in other words, is well behind in this race. Or is it? If you buy the argument that all home entertainment will one day be connected, Cisco's gear is as vital as ever. Why not layer consumer electronics on top of its infrastructure offerings?

TV is ripe for reinvention, after all. "We are all making this investment in high-definition television, but all we are doing with them is watching TV the same way," Cisco executive Ned Hooper told the Times' Saul Hansell in an interview. "They [high definition televisions] can actually provide all sorts of experiences, whether it is viewing family photos or connecting to the Internet to watch video."

So Cisco will take advantage, right? Wrong. Hooper told Hansell that Cisco has no interest in selling televisions. The company assumes that all TVs will one day be connected to home networks.

Color me jaded, but Hooper seems to miss the point of his own argument. To this Fool, it seems like an opportunity for Cisco to leverage its infrastructure strengths with a consumer electronics line. TVs aren't connected today, they'd be better if they were, so ... let's not build a networked TV? Give Hooper points for style: Never before have I seen cognitive dissonance elevated to high art.

Try again, Cisco.

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Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is a cognitive dissident.


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