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 $300 million during the third and fourth quarters of fiscal 2011.
Why in the world did they pay 590m$ and buy the company then?
IIRC the logic was FLIP increases the video traffic in various networks and hence CISCO can sell more Routers. Silly logic for buying the company. No wonder it ended up like this.
Closing the flip video section isn't too big given the competition of smartphone. People can now share photos and video through facebook or twister apps on any smartphone device. Business of flip video is inevitably going down hill if it is not already. I am sure, as big as Cisco, John Chamber is making the decision based on various factors that would include annual sales. I don't see closing flip video is parallel to stop innovation.
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