Cisco Kill Flip video cameras ?

Then, in 2009, the founders cashed out and sold to Cisco Systems, the computer networking giant, for $590 million. On Tuesday, Cisco announced it was shutting down its Flip video camera division. To some analysts, the decision to shutter Flip was an admission by Cisco that it made a mistake. Flip was one of the most visible targets out there. Cisco’s an elephant.”

Just as the Flip was reaching its zenith, the smartphone was gaining traction among consumers. For technology entrepreneurs, the Flip story may be a cautionary tale of another sort. Cisco said its decision to shut down the Flip division was part of an overall restructuring plan of its consumer business. Cisco had made inroads into the consumer market over the last decade by purchasing Pure Digital Technologies, maker of the Flip, as well as Linksys, the home-network router manufacturer. Mr. Chambers embodied the exuberance for consumer products, saying he owned eight Flip devices.
Existing camera heavyweights like Sony and Kodak rushed to release their own Flip-like camcorders, trying to chase Flip’s runaway sales. Still, Flip’s luster began to fade, as a spate of smartphones with built-in cameras and editing applications hit the market. In another sign of trouble, Mr. Kaplan, who became Cisco’s general manager of consumer products after Cisco acquired Pure Digital, left the company in February.

Stephen Baker, an analyst with NPD Group, “Cisco was never really committed to the product. Although the company never disclosed specific numbers on Flip, analysts estimated it accounted for a fraction of the Cisco’s business. Simon Leopold, an analyst with Morgan, Keegan & Company, said Flip probably had about $400 million in annual revenue, compared with roughly $40 billion for Cisco over all.

Cisco on Tuesday announced that it will stop making the Flip camera, a popular pocket-sized video camera it bought only a couple of years ago from a company called Pure Digital. Cisco bought Pure Digital, the maker of the Flip camera, in 2009 for $590 million. Many experts and fans of the Flip camcorder wonder why Cisco didn't try to sell the business unit, especially since the Flip products are considered market leaders. It remains far and away the leading consumer video camera company.

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

Shutting down consumer focused operations to move towards enterprise customers also means that Cisco expects to lay off about 550 employees by the fourth quarter of 2011.

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