Cisco Systems withdraws from Smart City Push

Urban planners and local governments have been preparing for a future where technology will reshape the urban landscape, with features such as autonomous cars, smart lighting and connected alarms to help protect residents. Communications using 5G technology generally allow smart devices to be adopted.

For Cisco, best known for providing routers and other networking equipment to corporate customers, this vision promised a new potential market. And the effort, built largely around the company’s Cisco Kinetic for Cities software services, became a high-profile initiative for CEO Chuck Robbins as he tried to transform Cisco from a hardware vendor into a company most closely related to the lucrative business of selling software. services.

Now Cisco continues. “Recently we decided to stop sales and finally support [for] the Cisco Kinetic for City product line to align our product investment with evolving market needs and customer needs, ”a company spokesman told the Wall Street Journal.

Trying to steer an inherited technology business toward promising new areas can be difficult. International business machines Corp.

for years he tried to bring his Watson artificial intelligence system to industries such as healthcare, but many customers abandoned the product when they found it had a limited impact on patients. Microsoft software giant Corp.

he swept away his effort to enter the smartphone market. And the chip maker Intel Corp.

he said he recently closed the Intel studios effort that he intended to play a more important role in augmented and virtual reality.

Cisco bought Jasper Technologies Inc. for $ 1.4 billion in 2016 to increase its experience in the area of ​​the so-called Internet of Things, connected devices that would also underpin a smart city. The following year he launched Cisco Kinetic for Cities.

“There are many great opportunities” in smart cities, Robbins told the newspaper in 2017, noting the potential benefits offered by technologies such as connected lighting. Shortly afterwards, the company said it would launch a $ 1 billion program aimed at helping cities adopt technologies to transform their neighborhoods.

For Cisco, the shutdown comes as the company is undergoing a broader restructuring after disappointing Wall Street with its fourth-quarter fiscal results over the summer. Robbins said Cisco would reduce spending by $ 1 billion and cut staff to reflect changes in customer spending priorities during the coronavirus pandemic. The company, he said, would devote more effort to security services that are now valued by customers who fit a distributed workforce.

The pandemic has severely affected local government budgets that are needed for smart city investments. A survey conducted in June by the National League of Cities, a group advocating for a large number of cities, showed that 65% of U.S. cities delay or cancel infrastructure projects.

Cisco isn’t the only company struggling to make smart cities a business success. This year Alphabet Inc.

with the support of Sidewalk Labs Inc. came out of a $ 1 billion smart city project on Toronto’s boardwalk. Google’s father had invested hundreds of millions of dollars on the sidewalk, with most of it going to the Toronto project, and he had little to show for it.

Cisco’s approach to the smart city differed from that of Google, which focused largely on showcasing its technology in one place to serve as a model that others could adopt. Cisco offers a broader network of partnerships that work with locations across countries to help support their smart city projects.

“Smart cities are hard to sell,” said Christopher Reberger, a former Cisco director who has analyzed the economics of smart cities. The return on investment can be difficult to quantify, he said, and combining different smart city technologies can seem daunting. “Even basic things like public Wi-Fi have been difficult.”

Cisco said it was not abandoning business with local authorities and was committed to working with cities in areas such as network connectivity and security. It would also support companies that offer smart city technologies, the company said.

But the decision to slow down is a setback for Cisco, which has been trying to increase sales of software services through hardware.

“Cisco’s transition to software and subscriptions has been mediocre at best,” said Jim Fish, senior research analyst at Piper Sandler & Co.

Write to Aaron Tilley to [email protected]