Print 20 comment(s) - last by Pessimism.. on Apr 13 at 2:25 PM

Cisco crashes and burns with Flip purchase

What once seemed like a promising segment of the consumer electronics market is now being brushed aside -- at least in the Cisco camp. Just two years ago, coughed up nearly $600M to acquire Pure Digital, the maker of the popular Flip video cameras

While many questioned the need for Cisco, a networks-oriented company, to invest in this hot consumer category (over two million units were sold within the first two years), the company moved forward and carried the Flip torch. Now, Cisco's spending spree is coming back to bite it in the butt. 

Cisco is closing down its Flip division, and will restructure its other business operations. As a result, the company will take a $300M charge and will fire 550 employees by the end of this year according to the New York Times.

"We are making key, targeted moves as we align operations in support of our network-centric platform strategy," said John Chambers, Cisco chairman and CEO. "As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimize and expand their offerings for consumers, and help ensure the network's ability to deliver on those offerings."

So why is Cisco dumping its investment so soon? It all comes down to convergence. You can't shake a stick without knocking a camera-equipped phone out of someone's hand. On top of that, many of today's high-end smartphones come with high quality image sensors that can capture 720p video footage

With most tech-savvy individuals already carrying around a small, powerful "video recorder" in their pockets 24-7, why would they need to purchase a separate, larger dedicated device with similar capabilities? 

Similar digital convergence has happened on a lesser scale with MP3 players, but one has to wonder while all of the smart folks over at Cisco didn't see this one coming.

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RE: About time!!!!
By Lord 666 on 4/12/2011 8:53:57 PM , Rating: 2
There is nothing stopping Cisco or some other company from just buying a cell phone company (Palm or maybe now RIM) and combine both the Flip technology and a smartphone.

That was my point with Warrior that since all cellphones have video cameras (even in the dark ages of 2009) then it would be logical to just combine the two instead of a dedicated device.

The VZW Thunderbolt comes with 32gb built-in. Can't tell me the technology of the Flip (other than the lens) is vastly different than a smartphone.

Come to think of it, I find it oddly curious why Cisco licenses both the trademark of iOS and iPhone to Apple. Sure, they are not patent trolls, but for Cisco not to enter the smartphone segment is missing the boat. Look at what they did with cable boxes and home routers...

RE: About time!!!!
By fic2 on 4/12/2011 10:13:05 PM , Rating: 3
Look at what they did with cable boxes and home routers...

Buy existing companies (Scientific Atlanta and Linksys) and relabel the products?

RE: About time!!!!
By Lord 666 on 4/12/2011 10:56:42 PM , Rating: 2
Correct - read my first sentence. Isn't that what they did with every other acquisition? Protego Networks is an excellent example, can list many others.

I even asked/suggested to John Morgridge in 2005 about acquiring Palm. He simply, "Hmm, that would be interesting" and we went back to discussing something else. It is illogical for Cisco not to purchase a handset company and in 2011 - 2012, it would be very plausible for them to purchase RIM. Think about the instant business customer base along with complimentary product lines plus a new tablet that can run Android.

There is nothing stopping Cisco or some other company from just buying a cell phone company (Palm or maybe now RIM) and combine both the Flip technology and a smartphone.

"I f***ing cannot play Halo 2 multiplayer. I cannot do it." -- Bungie Technical Lead Chris Butcher
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