Cisco to abandon Flip, shed 550 jobs and shift focus away from consumers

Stuart Corner
Wednesday, 13 April 2011 10:44

IT Industry - Strategy

Cisco - which has seen its market value fall 34 percent in the past 12 months - is to close its Flip camcorder business and make major changes to the rest of its consumer focussed operations in a move that will see it shed 550 jobs and take a $US300m hit this financial year.

The company says its key priorities are now core routing, switching and services, collaboration, architectures; and video, and its remaining consumer businesses - networking products and its Umi home telepresence offering - will be realigned to support these key priorities.

CEO John Chambers said: "As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimise and expand their offerings for consumers, and help ensure the network's ability to deliver on those offerings."

Cisco paid $US590m for Flip developer Pure Digital in March 2009, with Ned Hooper, senior vice president of Cisco's Corporate Development and Consumer Groups, saying: "This acquisition will take Cisco's consumer business to the next level as the company develops new video capabilities and drives the next generation of entertainment and communication experiences."

The Pure Digital team became part of Cisco's Consumer Business Group and Jonathan Kaplan, chairman and CEO of Pure Digital, became general manager of the combined organisation. He left last month to "pursue other career opportunities." His departure followed a disappointing performance for his division: revenues in Cisco's second fiscal quarter fell 15 percent year on year.

Cisco says it will "support current FlipShare customers and partners with a transition plan," but has given no details. FlipShare is a web site to which users can upload videos from the Flip camcorders for sharing with others.

Cisco's says it will "refocus" its home networking products division, formerly Linksys, "for greater profitability and connection to the company's core networking infrastructure as the network expands into a video platform in the home." Again, it has given no details. However it says these products will continue to be available through retail channels.

Umi, its recently launched home telepresence equipment and service offering will be integrated into the company's Business TelePresence product line and will operate through an enterprise and service provider go-to-market model, "consistent with existing business TelePresence efforts."

Cisco is also being vague about the future of Eos, its software as a service" platform that is claimed to enable media  entertainment companies to more efficiently create, manage and grow high-value social-entertainment experiences built around their branded content. Cisco says, cryptically, that it will "Assess core video technology integration of Cisco's Eos media solutions business or other market opportunities for this business."