Cisco's Flip Flop

Cisco's announcement that they would exit the Flip Video consumer business was a surprise to many, in particular a consumer base of loyal Flip fans. It wasn't that much of a surprise, however, to those who follow tech and even less so to those in the smartphone industry. The story began with Pure Digital Technologies, which introduced the low-priced, simple-to-use Flip in 2007, and was ranked by Deloitte as one of the fastest information technology companies before being bought by Cisco in 2009 for $590 million. The only problem was that Cisco failed to anticipate the rapid evolution of smartphones and other devices like Apple's iPod which provide an easy means to both capture video and share it. Cisco has an opportunity to integrate these capabilities into the Flip but failed to do so. That left the Flip as a cool device for making videos but one more thing to carry around -- and far less capable in other ways than today's smartphones.

The move makes sense for Cisco which is under pressure to show growth. The consumer market has been a distraction from Cisco's five key company priorities – core routing, switching and services; collaboration; architectures; and video. The consumer-oriented telepresence service called "umi" is another example of a compelling idea, but ended up being a high-priced HDTV offering that was too much of a hassle, and too costly, to compete with Skype, web cams and other video chat technoologies. Cisco plans to roll their umi unit into the Business TelePresence product line. Cisco's WebEx service also integrates video so there's the opportunity to leverage umi technology across several business units. Although exiting businesses is rarely an easy decision, it's likely the right one for Cisco.