Cisco Systems (NASDAQ:CSCO) is abandoning its efforts to push into a once-promising market. The company has decided to significantly scale back its smart cities products and services division in favor of devoting resources to other company initiatives.
"We recently decided to stop sales and eventually support [for] the Cisco Kinetic for City [sic] product line to align our product investment to evolving market needs and customer requirements," a Cisco spokesman told The Wall Street Journal.
The company's efforts in the sphere got a big boost in 2016 when it acquired privately held Internet of Things (IoT) tech specialist Jasper Technologies in a $1.4 billion deal in 2016. At the time, the buyer said that owning Jasper would "allow Cisco to offer a complete IoT solution that is interoperable across devices and works with IoT service providers, application developers, and an ecosystem of partners."
IoT devices and technologies are the foundation of smart cities -- sweeping digital initiatives that promise to modernize and automate much of the infrastructure underpinning the world's municipalities. Jasper was the cornerstone for Kinetic for Cities, a smart cities IoT unit that was established in 2017.
The closure of the division comes after several quarters of revenue declines from Cisco. As with many companies across a range of sectors, the networking equipment giant has been hit hard by budget retrenchments. These are due to clients curtailing their spending on such products and services because of the deleterious economic effects of the coronavirus pandemic.
Investors seemed to be cautiously optimistic about Cisco's retreat. The stock traded up by nearly 0.9% on Monday, roughly matching the gain of the S&P 500 index.