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.
Back in 2009 when they made the acquisition, I have a vague recollection of one of the Founders of Pure Digital at Tiecon 2009 (May); he was gloating over the Mega Deal ; Their VC backers were all googo...gaagaa and how it was a big big win being able to sell to Cisco for close to $ 600 M;
there was some discussion that perhaps Cisco was thinking of getting into the mobile play maybe an acquisition of Nokia or even a Smartphone play - PALM ; But this is 2 years ago. We have since seen Nokia go downhill and Palm into the HP domain;
Now i get the impression that CISCO is all CHAOS. Most of their Star performers are at Start-ups or at competitors or even transitioned into Social media....as these companies have grown their own Hardware divisions;
I am hopeful that in the next 6-12 months Cisco may re-emerge a little nimbler, a lot leaner and maybe the Street will have to be OK with 55-60% Gross margins as opposed to the 70-75%;
Also Chambers should just pay the Corporate Tax due to IRS and Repatriate money back to USA;
I'm sorry people are getting laid off. I had to wonder why Cisco even bought Flip in the first place. Compare the Flip and Kodak Zi8. The Zi8 is a no-brainer. It does everything the Flip does, extra HD cables, lower purchase price and Kodak has already improved their HD product to newer sport and touchscreen models.
Like most acquisitions these days done over game of gulf or dinner fall short and like many readers indicated are slowly killing innovation. Flip was a low cost camcorder and served the market well in the early years but more recently did not expand out to include recent wireless and other sensor technologies. Nor did they venture into smart cameras that could have ended as security camera that are now highly popular as nanny watch.
Biz mode now days suck as everyone wants profit without putting in the innovation and time to add value that differentiates a product from the rest…a recipe to disaster. I would think and Flip is another casualty out of the silicon valley that larger company’s only like to see a Biz as black or white. I think it’s time to innovate and add color to the way we think, design and use retail channels to sell a product.
Smartphones are certainly displacing some of the low-end single function video cameras and digital still cameras, but I don't buy the hype that smartphones will eventually obsolete those other products.
Will the day ever come when a smartphone matches a high-end DSC or video camera in all respects? In optics, in resolution, frame rate, DSP enhancements, form factor and UI? I don't think so, unless you imagine a product category that is primarily a high quality camera, and oh by the way, it's also a phone.
It's sad news for Flip employees and users, but it makes sense. Cisco is not a consumer electronics company and the acquisition of Pure never made sense in the first place. At least with their acquisitions of Linksys and Scientific-Atlanta, there were logical affiliations with Cisco's core networking business.
It is said that smartphones are displacing the Flip but ... really? Are the newest ones (Evo, Droid, iPhone 4, etc.) at that level? My impression is that they're still a couple of years off, enough time to transform Flip into a patent portfolio.
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