Cisco Systems Pulls Back From Smart City Push

This setback occurred because the pandemic put pressure on Cisco’s core business of providing network equipment and limited the ability of local governments to fund such projects.

For years, urban planners and local authorities have been preparing for a future in which technology will reshape the urban landscape with functions such as self-propelled cars, intelligent lighting and network alarms to protect residents. A national communication with 5G technology would make it possible to make widespread use of smart devices.

For Cisco, which is mainly known as a supplier of routers and other network equipment for companies, this vision promised a new market. And the company, largely inspired by Cisco Kinetic for Cities software, was a high-profile initiative for the company’s CEO.

Chuck Robbins.

while trying to transform Cisco from a hardware vendor to a company more focused on its lucrative software business.

Now Sisko has moved on. We recently decided to discontinue sales and ultimately support of the Cisco Kinetic for City product line to align our investments with changing market needs and customer demands, a company spokesperson told The Wall Street Journal.

It can be difficult to tune outdated technology companies into promising new directions.

International Business Machines Corp.

has been trying for years to make its Watson artificial intelligence system available to industries such as healthcare, but many customers have given up on the product when they found it had only a limited impact on patients. The software giant

Microsoft Corporation.

He’s trying to break into the smartphone market. And the chip manufacturer

Intel Corporation.

indicated that it has recently completed work on Intel Studios, which aims to play a greater role in augmented and virtual reality.

Cisco acquired Jasper Technologies Inc. in 2016 for $1.4 billion to expand its expertise in the Internet of Things – connected devices that will also serve as the backbone of the smart city. The following year Cisco Kinetic for Cities was launched.

After disappointing fourth quarter results, Cisco announced $1 billion in spending and staff reductions.



In 2017, Robbins told the magazine that smart cities offer many opportunities, highlighting the potential benefits of proposed technologies such as connected lighting. Shortly after, the company announced a $1 billion program to help cities transform their neighborhoods through technology.

For Cisco, the closure comes at a time when the company is undergoing restructuring following the disappointing financial results of Wall Street in the fourth quarter of this summer. Mr. Robbins said Cisco will cut its spending by $1 billion. The Executive Board approved a $1.5 million budget and staff to address the changing spending priorities of customers during the coronavirus pandemic. He stated that the company would intensify its efforts to adapt its security services, now appreciated by customers, to a distributed workforce.

The pandemic has taken a heavy toll on municipal budgets, which are needed for sensible investments in the city. A June survey conducted by the National League of Cities, an advocacy group representing a large number of cities, shows that 65 percent of US cities postpone or cancel infrastructure projects.

Cisco isn’t the only company fighting to make smart cities a business success this year.

Alphabet Inc.

Frozen Sidewalk Labs Inc. has pulled out of a multi-billion dollar smart city project on the Toronto waterfront. Google’s parents invested hundreds of millions of dollars in Sidewalk, most of the money went to the Toronto project, and there wasn’t much to get out of it.

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Cisco’s approach to the Smart City differs from that of Google, which focused on showing its technology in one place as a model for others to adopt. Cisco has established a broader network of partnerships and works with subsidiaries in different countries to help them with their smart city projects.

Smart cities are hard to sell, says Christopher Reberger, a former Cisco director who analyzed the economy of smart cities. The return on investment can be difficult to quantify, he said, and assembling disparate smart urban technologies can seem daunting. Even basic things like public Wi-Fi were complicated.

Cisco said it wouldn’t stop working with local governments and would be committed to working with cities in areas such as network connections and security. It will also support companies that offer smart city technologies, the company said.

But the decision to withdraw is a setback for Cisco, which has been trying to boost sales of software rather than hardware.

Cisco’s move to software and subscriptions has been mediocre at best, said Fish Jim, senior analyst at Piper Sandler & Co. Mr. Robbins stated that the company is achieving its goals.

Email Aaron Tilley at [email protected].

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