Cisco’s Consumer Clusterf*ck Claims Eos, Media Solutions Group

Cisco Systems

Flip’s demise was the headline grabber in John Chambers’ effort to show his leadership skills to the Cisco (NSDQ: CSCO) board and investors. But the Cisco chairman and CEO’s inability to deliver on the expensive, multi-pronged move into the consumer space took down internal efforts as well as high-profile acquisitions, including Eos, the internally incubated white-label social entertainment platform, and the Cisco Media Solutions Group. Dan Scheinman announced his immediate resignation via Twitter; it’s not clear yet how many will be leaving.

It’s also not clear exactly what’s happening with Eos, which Scheinman said via Twitter is still years away from economic success. Chambers was vague in the announcement about the consumer retrenchment, saying Cisco would “assess core video technology integration of Cisco’s Eos media solutions business or other market opportunities for this business.” Could it wind up with Warner Music Group (NYSE: WMG), its largest partner? That might be more likely if Warner wasn’t on the block. The company is in its second round of bids and a deal could come in weeks.

Cisco PR told Billboard: “We are still evaluating the specific course of action for Eos.” Scheinman’s departure suggests at least one decision has been made: Cisco won’t invest in the service but will support it for the near-term. Billboard‘s sources say the transition could take a year or more and that fans shouldn’t see a difference.

Scheinman, SVP and GM reporting directly to Chambers, joined Cisco in 1992 and was in corporate development/M&A before CMSG was formed in 2007. In that role, he was involved in the acquisitions of Linksys and Scientific Atlanta. Cisco acquired white labler Five Across in 2007 for the media solutions group; CMSG’s mission was developing and marketing back-office products that help digital media content build consumer-facing content solutions. Warner was the first partner for Eos, starting slowly with two artist sites and building up to dozens.

In the end, the growth was too slow. While Eos was building out and expanding beyond music, it became easier and less costly to build similar solutions in house or with other services. WMG liked the results and others signed on but, as Scheinman tweeted with news of his resignation, “Eos succeeded technically, but economically we were still 2 years off. Thank you!!”

Late Wednesday, he added some more thoughts via Twitter:

2 reflections on being an “intrapraneur”. 1) finance teams are not VCs. the art of getting them on side is key. 2) you can find grt people

one more for tonight. What happened here not a reflection on big co, or music industry. If we could have won all, big co would be investing

Reached by email, Scheinman referred questions to Cisco corporate.


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