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Hurdles for Cisco Human Network CE Vision

Cisco's consumer strategy will establish the company as one of the most important challengers to the old guard of the consumer electronics (CE) industry, according to the latest research from the Strategy Analytics.

Cisco must address two key hurdles in order to implement the Human Network vision demonstrated at this year's CES in Las Vegas: resistance to open technology standards from service providers and maintenance of its lucrative returns in the face of wafer-thin margins and plummeting prices in the consumer electronics market.

However, if the Cisco plan succeeds the field would be open for a wave of newcomers to exploit the potential of open digital IP platforms to support successive waves of device innovation, transforming today's competitive environment.

"Cisco should be watched closely by every major CE and digital home player," says David Mercer, Principal Analyst at Strategy Analytics. "The company's proposals to transform technology industry business models have the potential to threaten every established player, from Sony and Panasonic to Apple and Microsoft, while offering unprecedented opportunities to any new entrant prepared to invest in the connected consumer vision."

However, the report also identifies a disconnect between Cisco's advocacy of horizontal open standards and the vertical strategy pursued over the past several decades by its largest consumer acquisition, Scientific-Atlanta (S-A).

The report suggests that it is unlikely that Cisco will be able to move toward open standards in S-A's core cable markets without introducing a negative impact on S-A's contribution to Cisco's revenue and profit lines.

For this and other reasons, the vision of an open standards Consumer Electronics industry is unlikely to be realized for many years to come, according to the Strategy Analytics assessment.

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