Cisco's announcement yesterday that they were shutting down their Flip camera operation was an unfortunate, and potentially life changing, action for the 550 people that it put out of work. But I'm sure that the people working in the core Cisco businesses simply breathed a sigh of relief that the company was heading back on track.
From an outsider's perspective, Cisco's forays into the consumer electronics world have always been somewhat lame. When they made their original Flip acquisition, my first thought was "did someone lose a bet?" It just made very little sense from any perspective. The Linksys acquisition made a little more sense, as they were acquiring a vendor of networking products, but it really didn't seem to mesh well with their core business model or their overall marketing process. And frankly, how many $99 home routers do you have to sell to match the profit (and profit potential) from a single corporate switch chassis?
Perhaps Cisco management was looking towards the future and preparing for the assault by HP on their core business model. If so, they haven't done a very good job of it. HP continues to grow their consumer products market and their corporate server and desktop share, while taking a continually growing slice out of Cisco's core infrastructure business. Cisco's unified datacenter business has done a decent job of growing and gaining market share in areas beyond network infrastructure with their server chassis and blades and this is where Cisco really needs to focus.
They are never going to be a one to one competitor for HP; I hope never to see a Cisco-branded inkjet printer come to light. But the move to cloud computing and virtualized desktops plays into Cisco's strengths. They are already providing the majority of the infrastructure that business is using to be connected to all of their corporate resources. Building on that strength, and taking a leadership position in these growing markets is not just what Cisco should be focusing on it is what they absolutely must do not to become just another footnote in the history of dominant technical companies.