The countermeasure comes as the pandemic has influenced Cisco’s core business of providing network equipment and limited the ability of local governments to fund such projects.
Urban planners and local governments have been preparing for years for a future in which technology restores the urban landscape, with features such as self-driving cars, smart lighting and connected alarms to help protect residents. Communications using 5G technology covering the city would allow the widespread adoption of smart devices.
For Cisco, best known for providing routers and other networking equipment to corporate customers, this vision promised a new emerging market. And the effort, built largely around the company’s Cisco Kinetic for Cities software services, became a profile initiative for CEO Chuck Robbins as he tried to turn Cisco from a hardware vendor into a more closely associated company. with Profitable Business Selling Software Services.
Now Cisco is moving on. “Recently we decided to stop sales and possibly assist [for] the Cisco Kinetic for City product line to align our product investment with evolving market needs and customer requirements, ”a company spokesman told The Wall Street Journal.
Trying to target an inherited technology business to promising new areas can be difficult. International Business Machines Body.
For years it has tried to bring its Watson artificial intelligence system to industries such as healthcare, but many customers have given up the product when they found it has a limited impact on patients. The Microsoft software giant Body.
has struggled to enter the hot smartphone market. And the chip maker Intel Body.
said it recently closed its Intel Studios effort, which aimed to play a greater role in augmented and virtual reality.
Cisco bought Jasper Technologies Inc. for $ 1.4 billion in 2016 to increase its expertise in the field of the so-called Internet of Things, connected devices that would form the basis of a smart city. The following year, it launched Cisco Kinetic for Cities.
After releasing disappointing results in the fourth quarter, Cisco said it would cut spending by $ 1 billion and reduce staff.
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“There are a lot of great opportunities” in smart cities, Mr. Robbins told the journal in 2017, pointing to the potential benefits of technologies such as connected lighting. Soon, the company said it was launching a $ 1 billion program to help cities adopt technologies to transform their neighborhoods.
For Cisco, the closure comes as the company undertakes a larger restructuring after disappointing Wall Street with fourth-quarter fiscal results over the summer. Mr. Robbins said Cisco will cut spending by $ 1 billion and reduce staff to reflect changes in customer spending priorities during the coronavirus pandemic. The company, he said, will put more effort into the security services now appreciated by customers who are adapting to a distributed workforce.
The pandemic has hit local government budgets hard to invest in smart cities. A June survey by the National League of Cities, an advocacy group for a large number of cities, showed that 65% of US cities are delaying or canceling infrastructure projects.
Cisco is not the only company struggling to make smart cities a success in business. This year Alphabet Inc.
– supported by Sidewalk Labs Inc. came out of a billion-dollar smart waterfront project in Toronto. Father Google poured hundreds of millions of dollars into the sidewalk, most of which was allocated to the Toronto project and did not have much to show for it.
Cisco’s approach to the smart city was different from that of Google, which focused largely on presenting its technology on a single site to serve as a model that others could embrace. Cisco has developed a wider network of partnerships working with locations in different countries to support their smart city projects.
“Smart cities are a hard sell,” said Christopher Reberger, a former Cisco CEO who looked at the economy of smart cities. The return on investment can be difficult to quantify, he said, and the combination of disparate smart city technologies may seem daunting. “Even the basics, like public Wi-Fi, were difficult.”
Cisco said it is not giving up on business with local authorities and is committed to working with cities in areas such as connectivity and network security. It would also support companies that provide smart city technologies, the company said.
But the downsizing decision marks an obstacle for Cisco, which has tried to boost sales of software services over hardware.
“Cisco’s transition to software and subscriptions has been mediocre at best,” said Jim Fish, a senior research analyst at Piper Sandler & Co.
Write to Aaron Tilley at [email protected]
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