Flipped out. Why? They are killing the Flip video. Networking powerhouse Cisco is basically killing innovation. I liked the simple device.
Here's what Cisco is doing: On Tuesday (April 12), the company announced that it will exit aspects of its consumer businesses and realign the remaining consumer business to support four of its five key company priorities – core routing, switching and services; collaboration; architectures; and video.
As part of its plan, Cisco will close down its Flip business and support current FlipShare customers and partners with a transition plan. Additionally, the company expects this will result in a reduction of approximately 550 employees in the fourth quarter of fiscal 2011.
In 2009, Cisco completed its purchase of Pure Digital Technologies Inc. San Francisco-based Pure Digital, creator of the best-selling Flip Video brand, was a pioneer in developing consumer-friendly video solutions with mass-market appeal.
''The acquisition of Pure Digital is key to Cisco's strategy to expand its momentum in the media-enabled home and capture the consumer market transition to visual networking. The acquisition will take Cisco's consumer business to the next level as the company develops new video capabilities and drives the next generation of entertainment and communication experiences,'' according to Cisco at the time of the deal.
Now, Flip is gone. Dead. Maybe the Flip video device has some bugs. It was not a professional camcorder. But it was easy to use-and fun. I use mine all the time.
Perhaps Cisco should not have bought them in the first place. My guess: John Chambers has been under pressure to shake-up Cisco. Cisco is turning into a old, stodgy company. Killing Flip wasn't the solution. My solution: Spin it out and back the darn thing!
Here's what else is going on the company:
•''Refocus Cisco's Home Networking business for greater profitability and connection to the company's core networking infrastructure as the network expands into a video platform in the home. These industry-leading products will continue to be available through retail channels.''
•''Integrate Cisco umi into the company's Business TelePresence product line and operate through an enterprise and service provider go-to-market model, consistent with existing business TelePresence efforts.''
•''Assess core video technology integration of Cisco's Eos media solutions business or other market opportunities for this business.''
"We are making key, targeted moves as we align operations in support of our network-centric platform strategy," said Chambers, Cisco chairman and CEO, in a statement. "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."
In connection with the changes to the consumer business, it is anticipated that Cisco will recognize restructuring charges to its GAAP financial results, with an aggregate pre-tax impact not expected to exceed $300 million during the third and fourth quarters of fiscal 2011.
The issue is not so much Smartphones x single use, there is room for both.
The problem is they'd be facing competition from iPhones and Androids on the Smartphone side, and also from Canon, Nikon, Sony, Panasonic, Casio etc on the camera side.
What were they thinking?
FRank, I have to agree with you on this one. What I don't understand is, Cisco, which touts Telepresence so much, couldn't get its engineers to put their heads together to make more innovations on how they can leverage Flip as a platform to take it to a level that can beat the performance of mobiles, tablets and other handhelds.
With their much publicized holy grail of connecting every one, it seems to me that Cisco is calling it quits too soon.
Dr. MP Divakar
Can anyone provide a back of the envelope analysis of why it makes financial sense that "Cisco will close down its Flip business and support current FlipShare customers and partners with a transition plan."? Does "a transition plan" mean that the business is being sold / spun off? If not, it would certainly seem that somebody would find it economically advantageous to buy the business for $1 plus the support commitment and get it off Cisco's hands. (However, I must admit that I cannot offer to do so.)
Maybe they want to transition to something that's more profitable for Cisco. What telecom provider are they partners with?
I have worked for several start ups, and from what I can tell, modern start ups do not expect to grow their companies into the ranks of the market leaders. They expect, from the beginning, to grow their business until they garner the attention of the market leaders and are bought out. A company I currently work with is developing a melanoma drug that is having spectacular success and entering phase 3 human trials. Their goal is to be bought by a large pharma company. Have you noticed that the pharma companies have all but ditched their entire R&D operations? This is because their own drug discoveries have been costly failures. Beurocracy kills innovation. They are instead buying startups that have a drug already close to approval. It is a valid model. The small startup consists of experts in a particular field who are focused on one or two indications.
So it is a matter of target acquisition. It would make sense for Pfizer to target a start up with a new melanoma drig. It would likely be a dumb move for Microsoft to target them. So why did Cisco target a video camera company? Were they expecting to go head to head with Sony and Kodak? I think not. It reeks of insiders lining their pockets at shareholder expense.
I totally agree with AliNS. While a "cool" product to own as a get-me-by quickly for video recording and playback and plaster to my computer thru USB port, the hand-held device made no sense in the Cisco tent. Maybe their consumer strategy had backfired: you can't get into high-volume consumer electronics with the mentality of capital equipment (enterprise routers) sales model. The IPhone and Android video capabilities did Flip in. In Consumer Electronics its the successful integration of many functions in one hand-carried unit that counts, not just a simpler user model of a video function.
It absolutely didn't make any sense for Cisco to acquire Flip in the first place. What surprises me is that it took them so long to realize their mistake.
I never owned a Flip and never thought it would make much sense to own one anyway. If you don't think the iPhone does as good a job as a Flip, how much gap is there between the iPhone and a regular Sony or Canon to justify a product such as this in the middle? What was their competitive advantage anyway? having thought of some form factor no one else had thought before?
But, I'm sure some people made some dough...
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