Cisco Systems Gives Up on Smart City Boost

City planners and local governments have for years prepared for a future in which technology remakes the urban landscape, with features like self-driving cars, smart lighting and connected alarms to help protect residents. Communications using 5G technology covering the city would allow widespread adoption of smart devices.

For Cisco, best known for providing routers and other network 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 high-profile initiative for Chief Executive Chuck Robbins as he tried to turn Cisco from a hardware vendor into a company. more associated with the lucrative business of selling software Services.

Now Cisco is moving forward. “We recently decided to stop sales and, eventually, support [for] the Cisco Kinetic for City product line to align our product investment with changing market needs and customer requirements, ”a company spokesman told The Wall Street Journal.

Trying to push a legacy technology business into promising new areas can be difficult. International Business Machines Corp.

for years, it tried to take its Watson artificial intelligence system to sectors like healthcare, but many customers abandoned the product when they found it had limited impact on patients. Microsoft software giant Corp.

hindered its effort to enter the heated smartphone market. And chip maker Intel Corp.

He said he recently ended his effort at Intel Studios, which aimed to play a bigger role in virtual and augmented 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, the connected devices that would also support a smart city. It launched Cisco Kinetic for Cities the following year.

“There are many excellent opportunities” in smart cities, Robbins told the Journal in 2017, pointing to the potential benefits offered by technologies like connected lighting. Soon after, the company said it was launching a $ 1 billion program to help cities adopt technologies to transform their neighborhoods.

For Cisco, the shutdown comes at a time when the company is undertaking a broader restructuring after disappointing Wall Street with its fourth quarter fiscal results over the summer. Robbins said Cisco would cut $ 1 billion in expenses and personnel to reflect changes in customers’ spending priorities during the coronavirus pandemic. The company, he said, would put more effort into the security services now appreciated by customers who adapt to a distributed workforce.

The pandemic has hit the budgets of local authorities that are needed for investments 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 cities in the U.S. are delaying or canceling infrastructure projects.

Cisco is not the only company struggling to make smart cities a business success. This year’s alphabet Inc.

Sidewalk Labs Inc., supported by her, came out of a billion dollar smart city project on the Toronto waterfront. Google’s father had dumped hundreds of millions of dollars into Sidewalk, with most of that amount going to the Toronto project, and had little to show for it.

Cisco’s approach to the smart city is different from that of Google, which focuses primarily on showing its technology in a single location to serve as a model that others can adopt. Cisco launched a broader network of partnerships working with locations in several countries to help support its smart city projects.

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

Cisco said it is not abandoning business with local authorities and is 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 back off represents a setback for Cisco, which has been trying to increase sales of software services instead of hardware.

“Cisco’s transition towards software and subscriptions has been mediocre at best,” said Jim Fish, senior research analyst at Piper Sandler & Co. Robbins said the company was meeting its stated goals.

Write to Aaron Tilley at [email protected]