Cisco to Flip the Switch on Flip Camcorder Biz

By Erin Harrison April 12, 2011

In a reversal of its efforts to diversify consumer products, Cisco Systems said Tuesday it will be flipping the switch on its popular Flip Video business.

Cisco Systems Inc., the world’s largest maker of computer networking gear, has had several quarters of disappointing results and challenges in its core businesses, according to an Associated Press report. Analysts say the company has been trying to do too many different things.

Cisco Chairman and CEO John Chambers said the San Jose, Calif.-based company is making several “targeted” moves to better align operations.

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

A week ago, Chambers acknowledged the criticism, sending employees a memo vowing to take “bold steps” to narrow the company’s focus, the AP reported.

Cisco officials said the restructuring of its consumer business will entail:

--Closing down its Flip business and supporting current FlipShare customers and partners with a transition plan.

--Refocusing 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.

--Integrating 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.

--Assessing core video technology integration of Cisco’s Eos media solutions business or other market opportunities for this business.

The company said it expects the reshuffle of its consumer business will result in the loss of 550 jobs, or less than 1 percent of its work force of about 73,000, according to the AP’s report.

It also expects to take restructuring charges of no more than $300 million spread out over the current quarter, which ends April 25, and the following one.

Cisco bought Pure Digital Technologies Inc., the maker of the Flip Video camcorder, for $590 million in 2009, just two years after the San Francisco-based company made its first camera.

The Flip Video quickly became a top seller because it was easy to use, including its signature feature – a USB connector that flipped out of the case, letting the user connect the camera directly to a computer. The camera also contains video-editing software.

Industry experts say digital still cameras and smartphones, both of which now shoot video, have made a product like the Flip Video somewhat obsolete.

Erin Harrison is Executive Editor, Strategic Initiatives, for TMC, where she oversees the company's strategic editorial initiatives, including the launch of several new print and online initiatives. She plays an active role in the print publications and TechZone360, covering IP communications, information technology and other related topics. To read more of Erin's articles, please visit her columnist page.

Edited by Janice McDuffee

Executive Editor, Strategic Initiatives

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