Linksys, which was Cisco’s first acquisition in the consumer networking segment, was sold to home automation products manufacturer Belkin for an undisclosed amount last week. Established in 1988 and acquired in 2003 by Cisco for around $500 million, Linksys has been synonymous with home and small office networking products, while at the same time being considered a bit of an outlier within Cisco’s higher-margin, large-enterprise focused product portfolio. Despite Cisco’s plans as far back as in 2007 to end-of-life the Linksys brand, the Linksys brand has stayed alive until now, and is expected to continue to do so as part of Belkin’s Wi-Fi based WeMo home automation product suite.

Cisco has spent significant money and resources over the past decade to penetrate the consumer networking / data market segment. In addition to Linksys, Cisco also acquired on-demand collaboration player Webex and consumer-friendly camera maker Flip, and introduced a home energy controller amongst other things over this period. These were all excellent pieces of an overarching plan to penetrate the consumer segment, to control data-intensive endpoints in the home and the small enterprise. Success in this plan would have helped Cisco sell networking gear to the huge SMB market, and at the same time understand the needs and profiles of end-consumers in the face of the cloud-adoption megatrend. However, things did not work to plan, and as of today, Linksys has been divested, Flip has been shut down, and the home energy controller project has been shelved.

Can one company do well in both consumer/small business and enterprise? These two segments in general have vastly different sales force mindsets, gross and operating margins, user experience requirements, monetization approaches, product customization needs and so on. Focusing on both segments might just polarize the employee base, muddle public market expectations, and overall might just be a recipe for failure. Cisco seems to have accepted this, but not completely. A partnership with AT&T for the connected home announced at CES, and the acquisition of cloud-managed services provider Meraki suggest Cisco continues in its pursuits. Good luck, Cisco…

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During last week’s Open Compute Summit, Rackspace announced that it is working on designing its own servers using open-source Facebook specs. Rackspace has been involved with Open Compute since its inception in April’11, and has been itself a founder of the open-source cloud computing operating system Open Stack. This recent announcement by Rackspace thus underlines the momentum that the server commoditization trend has gained over the past two years. Open Compute now boasts more than 50 members including major server and storage players such as Intel, AMD, Dell, HP, VMware, EMC and Fusion-IO. Missing, on the other hand, are three big names – Google, Amazon and Microsoft – all of whom build their own proprietary servers already.

Rackspace’s announcement aside, Open Compute represents an interesting contrast between Facebook and Google. Facebook in this case seems to be sharing details of proprietary technology that otherwise would have provided it with a technological and financial edge over much of the market. Google on the other hand, seems to be far ahead of everyone including Facebook, but has never shared its knowhow until it has secured a significant technology head-start, for example with its Google File System or with its Open Flow implementation. Is Facebook’s greater dependence on the exponential data being generated and shared by its subscribers incentivizing the company to mobilize thought leadership in the entire industry to drive down cost, something which Google does not consider to be a critical issue for it in the near term? Will Google+ ever gain enough scale to change that perception for the company?

The biggest beneficiaries of Open Compute: ODMs such as Quanta that will thrive in a level, non-branded playing field. And the ones that suffer: major players in the compute and storage ecosystem, many of whom are Open Compute partners. These are the very companies that will see their margins decrease due to the initiative but have no option but to participate, so as to avoid being left out completely. Another example of disruption in technology, another example of data being king!

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The phrase ‘Internet of Things’ has been somewhat synonymous with the cutting-edge of technology for more than a decade now; every major technological advancement, whether in computing, connectivity or mobility, has resulted in applications that have led to a more connected world. Last week’s CES show helped move the ball further down the field, with LG announcing its latest line of smart appliances that can be controlled through NFC enabled smartphones. These new appliances (such as refrigerators, washers, dryers and ovens) can be paired with smartphones using NFC tags, after which point LG’s voice-enabled smartphone app can communicate with them over WiFi/3G/4G. The appliances themselves can analyze data and share insights, for example, a refrigerator keeping track of its contents and communicating potential expiry dates, possible recipes etc.

We have come a long way in this journey towards a connected home – motion sensors, smart meters, networked lighting, connected security devices, smartphones, smart TVs, and now smart appliances. More so, there has also been increasing demand in recent times for remote access and cloud-based control for devices as garage door openers, irrigation controllers, power switches etc. – single-function devices that can still benefit from remote connectivity – and companies including Opus portfolio company Arrayent have been offering cost-efficient, appliance-agnostic ways for instrumenting and cloud-enabling such devices.

So what can we expect next? As corporations like Samsung, LG and GE introduce smart appliances, what will it take to be able to communicate and control appliances across these diverse brands? A smartphone could be a logical control node in the connected home, but most smartphone makers also make appliances, resulting in potential conflicts of interest from data-sharing. And what if a smaller player, say a sprinkler system manufacturer wanted to offer connected devices but didn’t have the expertise for it? Clearly there is need for device-agnostic, platform players in getting us to a truly connected home. Cisco & AT&T could be an option, and so could be someone like Arrayent in partnership with individual device manufacturers. Access to household data is the big prize that a connected home will bring, accompanied by a multitude of monetization opportunities, and so we will for sure see evolution at a rapid pace. The infrastructure is coming together; now on to a connected, smart home, all at the fingertips of the consumer!

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Last week, leading social game developer Zynga announced that over the month of December it had followed through with its planned closure of 11 game titles, including Petville, Forestville, Fishville and Mafia Wars 2. As part of the announcement, Zynga also mentioned it was shifting its focus towards mobile games, and was also applying to run real-money gambling games in the state of Nevada.

Zynga’s rise as a pioneer in social strategy gaming is well-chronicled. Indeed, Zynga still dwarfs all other app developers on the Facebook platform in terms of MAU, with Farmville 2 currently being the most popular Facebook game. However, the next four most popular games in order are Texas HoldEm Poker (from Zynga), Candy Crush Saga (from King.com), Bubble Safari Ocean (from Zynga) and Diamond Dash (from Wooga), all of which are skill-based card/arcade games rather than strategy games. According to Flurry, social strategy games have a retention rate after 90 days of ~30%, and it does seem now that interest is waning on the whole for this game category. In that context, Zynga’s increased focus on games geared towards mobility (a much more tangible trend, with possibly greater long term monetization potential), and real-money gambling (which leverages human psyche) is an excellent ploy.

Question is, does Zynga have what it takes to become a player in mobile gaming? Zynga’s best mobile game currently is in-house developed Poker, ranked just outside the top 10 for iPhones, whereas two of its high profile acquisitions, Words with Friends and Draw Something languish outside the top 50. Clearly the company hasn’t picked its winners well. Mobile platforms offer a lot for gamers – anytime, anywhere access and possibilities for cross-platform, turn-based and multi-screen settings – and companies like Rovio, Ngmoco and King.com have successfully used these options to varying degrees in creating top grossing games. In fact, King.com is showing that it is possible to do well on both Facebook and in mobile. Does Zynga have it in its DNA to do the same? If not, then they might need to buy their way into mobility, and given their track record that’s not the best proposition for them.

As for now, it’s so long Petville…

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