Cisco's Flip Cam Failure and the Consumerization of IT

Apr. 18, 2011 12:30 PM ETCisco Systems, Inc. (CSCO)6 Comments
Jeffrey M. Kaplan profile picture
Jeffrey M. Kaplan
167 Followers

Cisco Systems’ decision this past week to shut down its Flip video camera business generated plenty of attention because of its implications on multiple levels for the networking company and the IT industry. Here are a few of my perspectives on the meaning of this event and the lessons to be learned.

Cisco deserves credit for the boldness of its acquisition of Pure Digital, the maker of the Flip camera, in 2009 and its equally brave decision to walk away from the over $590 million investment (acquisition, development and marketing costs) in a two year span. It had hoped to use the Flip camera and other home entertainment products as catalysts for additional consumer demand for its network connectivity capabilities and its service providers’ transmission services. Although Cisco didn’t sell as many Flip cameras as it hoped, it certainly can be credited to contributing the rise in video transmission volume during the past two years and growing expectations for more video services going forward.

Few could anticipate that the popularity of simple and economical video camcorders would quickly be give way to a new generation of smartphones with built-in video recording capabilities in such a short time after Cisco’s Pure Digital acquisition. In the same way digital cameras were made nearly obsolete by embedded cameras within smartphones, the video camcorder is becoming a thing of the past as a result of a similar bundling process. It is truly amazing to consider how many formerly standalone functions of a decade ago are now merely assumed features of today’s cellphones.

The power of the smartphone has grown so strong that Cisco didn’t even publicly offer its scuttled Flip camera unit to a potential buyer. In hindsight, Cisco may have been better off buying a smartphone developer, like Motorola (MMI), rather than

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Jeffrey M. Kaplan profile picture
167 Followers
Jeffrey M. Kaplan is the Founder and Managing Director of THINKstrategies, a strategic consulting firm that helps IT enterprise decision-makers with their sourcing strategies; solution providers with their marketing strategies; and venture firms with their investment strategies. Jeff is also the founder of the Managed Service Showplace and Software-as-a-Service (SaaS) Showplace online directories. Prior to forming THINKstrategies, Jeff served as Vice President of Marketing and Business Development at InterOPS Management Solutions, and was Director of Strategic Marketing at International Network Services (INS) and subsequently Lucent Technologies, which acquired INS. Jeff also spent thirteen (13) years as a leading industry analyst at IDC, Dataquest and META Group. Jeffrey is a frequent speaker at industry conferences and contributing columnist for BusinessWeek, Mass High Tech Journal, Financial Times of London, NetworkWorld, Business Communications Review, ComputerWorld, InformationWeek, Managing Automation, and the Web Hosting Industry Review on topics ranging from utility computing to outsourcing strategies. Visit his site at www.thinkstrategies.com/blog (http://www.thinkstrategies.com/blog).

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