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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 fic2 on 4/12/2011 10:13:05 PM , Rating: 3
quote:
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.

quote:
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.


"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer

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