Cisco bought Linksys for $500 million in 2003 but the company failed to do much with it. Analysts say that the home router business suffers from low margins so Cisco will be lucky to get its money back. The sale is part of Cisco's strategy to get rid of its consumer units and focus on its software and technology services businesses. It aced its Flip camera business as part of this strategy and this seems to be part of it.
However Linksys at least had the advantage that it was technology which worked with the rest of Cisco’s portfolio. Any router R&D would flow naturally to Linksys and, while its margins were low, it at least kept Cisco’s toe in the water. What does however appear to be happening is a polarisation between big companies who either want in to the consumer market, like Microsoft, or out of it.