Cisco’s Eos Spawns Questions, Few Answers

As Cisco expands further into relatively unfamiliar markets and solutions, I believe it is fair to ask whether the company is overextended and playing a high-stakes game well beyond the confines of its comfort zone.

Has it reached a point where its zealous pursuit of continuous growth has taken it into foreign markets where it possesses neither the cultural sensitivity nor the language skills to flourish? Does Cisco have a mandate to be in these places?

I’m not talking about geographies, and I’m not asking these questions rhetorically.

I don’t think the jury, as represented by the abstraction of the marketplace (with its less-abstract buyers and sellers) will be able to return a definitive verdict for a while. For Cisco, these new markets are works in progress.

One of the many new businesses Cisco has launched involves its EoS online social-entertainment platform, which Cisco believes it can grow into a major technological enabler (and a billion-dollar business) for beleaguered entertainment companies — purveyors of music and movies, respectively, but also potentially professional sports leagues — trying to brand and monetize their artists and properties.

Toward that end, Cisco Systems announced today an expansion of an existing relationship with Warner Music Group (WMG) Corp., the world’s third-largest music company. As a result of the deal, Cisco will allow Warner Music Group to use the web-based Eos platform as a fulcrum on which the recording company will design and develop customized, interactive sites — replete with social-networking features — for a growing number of its musical artists and their fans.

Today’s announcements builds upon an existing relationship the two companies announced at the Consumer Electronics Show (CES) in January.

Neither company has provided a wealth statistical data on how the relationship is faring commercially, nor on what sort of financial arrangement Cisco has with Warner Music. It isn’t clear, for example, whether or to what degree Cisco shares in advertising revenue or in revenue generated from music and merchandise sales that occur on the sites.

PaidContent.org reports that WMG has seen scaling in traffic per site and in the number of sites built on Cisco Eos. The major label sees four potential revenue streams: an enhanced site experience, ticketing with enhanced experience, subscriptions, and advertising/sponsorships.

It’s very early yet, for Cisco Eos and for its partnership with Warner Music. As mentioned above, Cisco Eos was announced in January, and Warner remains Cisco’s only Eos account. Nonetheless, Dan Scheinman, senior VP and general manager of Cisco’s Media Solutions Group, says his company plans to announce partnerships with other entertainment concerns in the months ahead.

With that in mind, Jennifer Martinez at GigaOm believes Cisco’s incursion into media and entertainment will put it on a collision course with MySpace, which is trying to position itself — at least partly — as a venue for interactive music and entertainment communities.

Cisco, however, refutes the notion that it will compete with MySpace, Facebook, or with other social-networking sites. We’ll see how it plays out.

To be sure, there are many unanswered questions connected with Cisco’s EoS.

4 responses to “Cisco’s Eos Spawns Questions, Few Answers

  1. Thanks for the thoughtful analysis and comments; very fair.

    The notion behind Cisco Eos is that the use of social networking is evolving beyond just connecting you with “your friends,” to the use of connecting you with the entertainment content you love — enabling you to not only interact with other fans, but directly with the content.

    Since this interaction requires the distribution of digital content (increasingly video) and connecting a user to that content (increasingly through an IP-enabled device or set-top box), it doesn’t take much to view Eos as a value-add extension of some of Cisco’s existing businesses in video, consumer devices and core networking.

  2. Thanks, Scott.

    Reviewing your comments, I can see why Cisco might view the Eos platform as the missing link between its acquisitions of Linksys and Pure Digital Technologies (the Flip video camera) on the consumer side — along with its purchase of Scientific Atlanta and its set-top boxes — and Cisco’s well-established franchises in core routing and enterprise networking.

    I think you will grant, though, that Eos does take Cisco into customer engagements and application scenarios that are unfamiliar.

    That doesn’t mean Cisco will not succeed — you’ve established that it has a rationale and justification for making the move — but it does mean that Cisco will find itself in the relatively strange position of having to prove itself to a different group of buyers and influencers, even at companies where Cisco already is the networking incumbent.

  3. Thanks Brad, for sharing your thoughts on Cisco Eos. Do join us on our blog at http://blogs.cisco.com/media/ to learn more about Eos and interact with the Cisco Eos team.

  4. Brad, completely agree — this is a whole new space, business model, etc for Cisco. The burden of proof is definitely on us to execute. Thanks for the comments.

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