April 12, 2011

Cisco’s Flip Camcorder Business To Shut Down

Cisco Systems Inc. is turning off its 2-year-old Flip camcorder business after years of attempting to diversify into consumer products.

After struggling through several quarters of disappointing sales for the camcorder and other personal tech gear, Cisco has decided to concentrate on its core business, LA Times is reporting.

The San Jose, Calif. company expects to shed 550 jobs when Flip is completely shuttered but will continue to support the sharing of Flip videos online.

Pure Digital Technologies Inc., the maker of the Flip camcorder, was purchased by Cisco for $590 million in 2009. The small, easy to operate video camera quickly became a top seller with its USB connector that flipped out of the case, allowing the operator to connect the camera directly to a computer, an innovative improvement for its time. The camera even contained video-editing software that started up on the computer.

However the portable technology was quickly usurped by the explosion in smartphone technology which did all the things the Flip could do, in an even smaller form factor, along with thousands of other applications, games, web connectivity and occasionally, make phone calls.

Cisco explained that it will aim to continue support of four of its five key priorities -- routers and switches; corporate communications and collaboration equipment; servers for data centers and video.

In a memo to employees last week, Cisco CEO John Chambers wrote that the company would take "bold steps" and make "tough decisions" in order to clarify its increasingly distracted business models, CNN Money reports.

"Our market is in transition, and our company is in transition. And the time is right to define this transition for ourselves and our industry. It's time for focus. We will address with surgical precision what we need to fix in our portfolio and what we need to better enable," Chambers concluded.


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