SOHO Big: Belkin To Buy Linksys From Cisco

Belkin, the consumer and small-business networking, storage and electronics provider, is expanding its reach with the planned acquisition of Cisco's Home Networking Business Unit, which includes Cisco's Linksys business.

With the acquisition, Belkin gains one of the best-known brands in the consumer and SOHO wireless networking business, with a 30 percent share of the U.S. retail home and small-business networking market, the Playa Vista, Calif.-based company said Thursday.

Linksys, which manufactures wireless routers, switches and related equipment as well as networked video cameras, has had a stormy relationship with Cisco that mirrors that of other consumer-facing products Cisco has carried in the past.

[Related: Cisco Restructures Consumer Unit: Flip Shut Down, Layoffs Coming ]

Cisco in 2003 acquired Linksys in a $500 million bid to take advantage of what the company called a fast-growing home networking market.

The company also made other acquisitions in the consumer IT space, including a $590 million acquisition in 2009 of Pure Digital, maker of the then-popular Flip video cameras. Two years later, Cisco killed the Flip video line.

Linksys-for-sale rumors began popping up as early as May 2011 following Cisco's shuttering of its Flip video camera business. The company also shut down its Umi personal telepresence offering.

Cisco in December hired bankers to assist in the sale of Linksys.

Belkin said it plans to keep the Linksys brand and will offer support and honor warranties for Linksys products as part of this transaction. The company did not disclose the value of the acquisition but said it is expected to close in March.

Hilton Romanski, vice president of corporate business development at Cisco, unveiled the planned sale of Linksys to Belkin in a blog post in which he did not hint about the difficulties Cisco has faced in the consumer IT market.

Belkin and Linksys together will create a world-class consumer networking technology provider, Romanski wrote. "Linksys will enhance Belkin's capabilities to meet the needs of OEMs, as well as provide access to a large user base. Belkin and Cisco intend to pursue a strategic relationship focused on a variety of initiatives including retail distribution, strategic marketing and products for the service provider market," he wrote.

NEXT: Belkin Plans To Use Linksys To Dominate Market

Romanski went on to write, "Linksys has long been an important member of the Cisco family and we are confident that we have found the best buyer in Belkin. We look forward to witnessing Belkin's growth as they bring Linksys into their family."

Mike Chen, senior director of product management for Belkin's networking business, said the acquisition will help Belkin create new innovations and take advantage of market opportunities in the small business and home networking market.

"Our goal is to keep both brands in the reseller and consumer channel," Chen said. "We will enter into a strategic relationship with Cisco, which could include reseller and distribution channels."

While the Belkin and Linksys brands have some product overlap, they cater to different consumer requirements, giving Belkin the opportunity to address a broader market than it could in the past, Chen said.

"Linksys has been connecting consumers to more powerful wireless networks for business, from home to small business solutions," he said. "Belkin has focused on customizing user needs for home network solutions."

With the acquisition, Belkin can take advantage of both brands to create technology to meet users' requirements for next-generation networking, Chen said. "Consumers around the world are increasingly connecting with each other using smart phones and tablets," he said. "This creates a need for technology to help consumers keep in touch through their mobile devices."

PUBLISHED JAN. 24, 2013