Did Cisco Flip too soon?

I’m in Silicon Valley this week meeting technology bankers and venture capitalists. Among the deal chatter, this is a question that came up more than once: Does Cisco feel a little silly for buying Flip camcorder maker Pure Digital, now that Apple has launched its popular iPod music players with built-in video?

The networking giant has long been trying to expand in the consumer gadgets market, and six months ago, it paid $590 million to acquire the San Francisco-based maker of pocket-sized digital camcorders. These sell for between $149.99 and $199.99.

Last week, Apple unveiled a new iPod Nano with built-in video. The 8GB version that can shoot up to two hours of video costs $149, and the next version costs $179.

Cisco’s plan was to use its operational scale and marketing to bring Flip to a much wider market. Given how much people like to post home-made videos on YouTube and other channels, it sounded like a smart idea.

But now Apple is giving Cisco a run for its money. Some people say the Flip shoots better video than the Nano, but generally speaking — which device would you rather choose, given that both are similarly priced? A hip little music player that also lets you shoot baby Morgan’s first steps (not to mention plays radio and has a pedometer), or a Cisco-owned digital video recorder?

from Commentaries:


On Cisco System's quarterly earnings conference call last night, Flip camerasCEO John Chambers gave out an interesting tidbit about the demand for consumer video cameras among corporate users.

Recall that in March, the world's largest maker of network equipment for enterprises and telecom carriers, made an underappreciated acquisition of Pure Digital Technologies, the maker of the insanely easy-to-use Flip video camera line. 

Flip video anatomyCisco's CEO said his company had signed a contract to sell $1 million worth of its Flip handheld video cameras to just a single corporate customer. That's a promising sign for a company Cisco paid $590 million to acquire in March. Just 589 more customers to go, John, plus the cost of the software, the chips, the plastic cases and the stock options.