Cisco Out To Crush Netgear?

Looks like Cisco Systems (CSCO) is dead serious about turning the screws on the competitors of its Linksys line of products. Today, Netgear (NTGR) announced its first-quarter 2008 financial results and they were, to put it mildly, terrible. Sure, revenues were up 14 percent on a year-over-year basis, but operating income, net income and earnings per share took a big dip. Netgear stock is tanking this morning — down 10 percent as Wall Street cuts estimates and turns sour on the company.

Why? Because Cisco is waging a price war on the company and its brethren. In a press release, Netgear CEO Patrick Lo said,”We also observed a slowdown in the U.S. retail market, prompting our primary competitor to lower prices below ours for certain consumer products.” Who might be that primary competitor? Mark Sue of RBC Capital Markets points to Cisco.

Lo seems confident that Netgear can weather the attack and plans to introduce a whole new slew of products “that we believe will strengthen us further in the SMB market.” The company introduced 11 new products in the first quarter and aims to introduce 12 more in the second. For Cisco, SMB has been a good area of growth, and it wants to rev up the revenues, never mind the low margins. Of course, all this will come to naught if the company kills the Linksys brand and shoots itself in the foot, as our poll suggests.

Netgear Joins the Web 2.0 Party With Dekoh

More and more, hardware vendors are finding that Web 2.0 technologies can be a good way to improve the end user experience of their devices. For example, Netgear (NTGR) said today it’s inked a deal with San Jose, Calif.-based Pramati to bundle ReadyNAS Photos, an adapted version of Pramati’s Dekoh Photos, that allows people to share photos right off their NAS device. (see screenshot.) Although I need to take a closer look at this before passing any judgment, the demo that the guys behind Dekoh gave me when I met with them last year was impressive.

Netgear isn’t the first hardware company to get on the Web 2.0 bandwagon. Maxtor back in 2006 teamed up with Fabrik and bundled MyFabrik service and software with its drives. Fabrik has since bought Simpletech, a drive and peripherals company. And last year, RCA teamed up with Box.net for its Small Wonder video camera. Of course, the company that has embraced Web 2.0 more than any other is GPS/Internet navigation device maker Dash.

Given that Web 2.0 technologies are well-suited for improving user experience, I hope this trend catches on and makes some of today’s digital devices even easier to use. I wonder what gadget gurus David Pogue, Walt Mossberg and my former boss, Josh Quittner, now a columnist for Time Magazine, have to say about it.

PS: If there are any more examples, let me know and I can add them to the list.