Cisco shutters Flip business, takes consumer mulligan

Cisco shutters Flip business, takes consumer mulligan

Summary: Cisco will shutter and realign its consumer businesses toward its enterprise customers, including its Flip pocket videocamera line and its Eos media solutions business.

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TOPICS: Networking, Cisco
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Cisco on Tuesday announced that it will shutter some of its consumer businesses and realign what's left to support its core networking infrastructure businesses.

That means that the company will:

  • Close down its popular Flip business, acquired for $590 million in March 2009;
  • Refocus its home networking business for "greater profitability and connection to the company's core networking infrastructure" as Cisco expands it into a home video platform;
  • Integrate its umi consumer videoconferencing product into the company's Business TelePresence product line, transitioning the product to an enterprise and service provider go-to-market model;
  • Take the core video technology integration of Cisco's Eos media solutions business and use it elsewhere in the company.

Cisco says its four key company priorities remain core routing, switching and services; collaboration; architectures; and video.

"We are making key, targeted moves as we align operations in support of our network-centric platform strategy," CEO John Chambers said in a statement.

Related:

The decision appears to have been made rather quickly -- still, Chambers hinted back in April that "tough decisions" were going to be made -- or at least didn't trickle down to key stakeholders until recently. Through 10 days ago, I had a scheduled meeting with Cisco representatives to preview a new addition to the company's Flip consumer video line -- but the meeting was canceled (not rescheduled) without reason and the launch delayed.

It may also signal a drop in the popularity (and thus revenues) of these pocket camcorders in response to the ubiquity of HD video-capable smartphones. The Flip acquisition was a little bit fringe for Cisco, and a possible drop in sales could have opened the door for Cisco to take the intellectual property and shutter the product.

The company's umi product is in a similar situation, though didn't come with a built-in audience. When Cisco announced the product in October 2010, it said the product would bring healthcare, education and financial services to the home. While that may still be the goal, it's clearly better served by Cisco's enterprise group.

Its Eos social and cloud-based content platform is in a similar boat.

While it's clear that Cisco isn't punting on video as a core competency, it appears that the company has realized that its resources are better marshaled through its enterprise customer base. Simply: if it can't win in these spaces, it wants out.

One last note: Cisco was clearly enamored with the former Pure Digital team's ability to connect with consumers. That's why the team was given a crack at its consumer router business, with the Valet and Valet Plus as the result. Whether some of those skilled employees will be integrated within traditional Cisco strengths or let go is the burning question.

Topics: Networking, Cisco

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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32 comments
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  • RE: Cisco shutters Flip business, takes consumer mulligan

    Well, that's great. My Flip Mineo arrived 2 days ago. Hope they actually support it going forward.
    JB2317
  • RE: Cisco shutters Flip business, takes consumer mulligan

    Using Flip's video expertise as an adjunct to their networking expertise for video-conferencing/collaboration services was more like the shortstop playing deep than left field. The retail division is shuttered, but the tech is still going to be utilized. Still, from a cold-eyed business standpoint, I wonder if they over spent at 590 million?

    I really liked Flips. Better get the most recent one while I can. It should be a good price.
    DannyO_0x98
    • RE: Cisco shutters Flip business, takes consumer mulligan

      @DannyO_0x98 Err? What actual tech is in a Flip that makes it worthwhile?! I thought the whole point of the Flip was in the concept:

      "Small, cheap camera with fall off a log simplicity - and no cables to lose"

      Now while I think it was a great product, I don't see much technology worth having for 590 million. Do I think they over spent on this? Yeah. Is it likely to be useful in their core business? No.

      It's one of those moments when you realise that companies like Cisco can be pretty clueless, and make decisions that are obviously flawed. You do have to wonder about the people at the top.
      jeremychappell
      • Egos and dollars

        @jeremychappell

        When you mix the two, you often get VERY stupid decisions.
        Economister
    • Better buy something like iPod touch since if records HD (not really much

      @DannyO_0x98: .. worse than even best Flip model), but also does much more than that.

      Flip was doomed since HD came to smartphones and mediaplayers.
      DDERSSS
      • RE: Cisco shutters Flip business, takes consumer mulligan

        @denisrs I have seen video from my iPhone and from a persons Flip on our soccer team. The iPhone sucks something horrible. The flip looked really good. So I'm not sure you can compare the two, at least with what I have available to me.
        ItsTheBottomLine
  • RE: Cisco shutters Flip business, takes consumer mulligan

    Never for one minute understood why Cisco flushed nigh on $1bn down the toilet on a pocket video camera company, when any competant phone can do a similar job, if a little less elegantly.

    What were they thinking !!
    neilpost
  • RE: Cisco shutters Flip business, takes consumer mulligan

    Still prefer to grab my flip over my smartphone for video for speed, quick easy Download to the PC and instantly editable. Maybe i'll grab a backup when they go on "discontinued clearance"
    jazman1966
    • RE: Cisco shutters Flip business, takes consumer mulligan

      @jazman1966 totally agree. great little video camera. time to get a backup.
      MAC Fallon
    • RE: Cisco shutters Flip business, takes consumer mulligan

      @jazman1966 Exactly. But the Ultra is better than the Mineo any day. I have both, the ability to use double a batteries rather than waiting for a charge.
      LucretiaPruitt
  • RE: Cisco shutters Flip business, takes consumer mulligan

    They paid $500M for Flip because back then in 2009, Flip had captured something like 15-20% of the consumer camcorder market.

    Thing is, that was also the segment far more concerned with "always have camera" than any measure of quality. Most of the Flip clones, like Kodak's, produced much higher quality video. Most smartphones don't, but that segment was Flip's base.

    And under Cisco, they didn't do anything signficant to evolve beyond "people whoreally don't care anout quality". I have more cash in camcorders that I did my first two cars, so its easy for serious videoheads to look down on Flip.

    But I saw the real death of this market nearly two years ago when I bought my Motorola Droid smatphone. From an enthusiast's point of view, the video with this phone is terrible. On the other hand, in bright enough lights, it's actually better than many consumer DV camcorders were. Smartphones and now some iPod type devices use the same 1/4" camera chips and lenses you found in the Flip. So no chance that phones wouldn't catch up, and make that $200 Flip just another feature of the pocket computer folks still call "phone".

    The phone also beats the Flip on easy in a way Flip could never follow... the can upload directly to YouTube or FaceBook or even Vimeo if you know what you're doing.
    Hazydave
    • RE: Cisco shutters Flip business, takes consumer mulligan

      @dave@... Phones don't screw onto tripods unlike the flip as well though.
      LucretiaPruitt
  • RE: Cisco shutters Flip business, takes consumer mulligan

    It's because they couldn't mark them up 100% like they do their core switches and router
    Turd Furgeson
  • RE: Cisco shutters Flip business, takes consumer mulligan

    This another example of the tech industry pulling a good successful product and leaving the genteral public high and dry. Tech companies that do not value their customers are the ones that seem to be making these business "focus" decisions. I wonder what came first bad business decisions or lack of internest in their customers. Actually I dont wonder....
    rtslik
  • What were they thinking...

    $590m for what? Unless there is some IP regarding the video compression, doesn't look like it was well spent...

    I'd like to think of myself as an average user...but cannot deal with the poor quality from my iPod Touch/iPhone...if I'm going to waste the time to record something, it might as well be good quality video. My compact VHS palmcorder got better video than anything I've seen on a smartphone - despite the issues of using an interlaced sensor and having to run it through a comb filter or reduce the resolution thru line doubling.

    Oh well. As a hobyist photographer, I guess I'm spoiled by teh DSLRs to get excited by lackluster video, be it smartphone, flip, or table. Unfortunately, even many of today's digital camcorders leave a lot to be desired.
    SoccerDad#2
    • RE: Cisco shutters Flip business, takes consumer mulligan

      @SoccerDad#2 <br>I have a top notch DSLR but could never decide on video and consequently never ever purchased one. I didn't want to go through the 10 year learning curve that I did with digital cameras. Then came Flip on sale at $99. One button and it records. No cables to add to the plethora of cables we seem to own these days. It's such a joy to use.<br><br>Where is the equivalent vrdeo to the famed Olympus C2100UZ?
      Ashtonian
  • RE: Cisco shutters Flip business, takes consumer mulligan

    A clear case of another poor business decision in purchasing a product that didn't fit their business model and now the consumer will end up footing the bill once again. Sounds like their CEO is ready for government service.
    cballinger1
  • Flip VS Kodak Playsport

    Kodak differentiated by realizing consumers wanted a semi disposable camcorder that could get trashed,lost or stolen. A smartphone may take video but it is not going to the beach and in the water, Flip should have been on top of this but maybe Kodak has better experience from being involved in consumer photography since the beginning of the recorded image.
    egmoore
  • RE: Cisco shutters Flip business, takes consumer mulligan

    Bout flip'n time, pun intended, the flip, and camera's like it, have erked me from their introduction, the only reason is because they are so overpriced for what they do, even the flip HD(720p) shouldnt have cost more than $150, my olympus sp 800uz cost the same as the flip HD and my camera has a 14MP sensor, 720p HD recording and 2K recording over HDMI, it also has 30x optical zoom or 24-840mm in 35mm photog equivalent, if you want to zoom with the flip you have to use digital zoom, witch is useless because it just reduces the clarity, just do it on your computer when you get home. Did i mention that my camera has 1.7GB of internal storage as well as up to 32GB SDHC storage and an easily and quickly replaceable battery? ya try to do that with a flip<br><br>Don't get me wrong, its a good design for a quick point and shoot, but there is no justification for the high price, similar to mac, dell and sony PCs
    Feds Against Guns
  • Another good company/good product killed by mergers

    This is rampant in IT industry. Companies buy up others who WERE capable of making a great product. Then they realize they don't actual value the product and suddenly their other REAL products take precedence. The great product, that was never really theirs, suddenly gets discontinued or abandon to rot. This industry has repeatedly killed great products and great companies through merger mania. But how else is an overpaid CEO supposed to make shareholders think they are doing something.
    royalef