Cisco’s Flip-flop

Buying a business is supposedly to add value to it or to your company. We have seen it with Sony buying Ericsson and HP buying Palm. Most of the time it is to add another industry to your own operations. It can sometimes also be seen as a talent acquisition for a company.

Today, I am sad, really sad actually. Cisco has announced that they will be closing down their handheld video camera operation Flip to focus on their switch business. It does makes sense as Cisco is something of a networking juggernaut but it still does not justify closing a business that you paid $500 million for in 2009. Surely they could have spun it off and potentially made the company independent with Cisco having a controlling interest in it.

The main reason why I believe that this move has been made is because Cisco have had a tough second quarter on the stock markets and their CEO must be seen as trying to fix the problem.

I think there are a few things that need to be taken into consideration over this decision:

• In the last 2 years smart phones have really become multipurpose devices. The camera found on smart phones can be used to record video and HD video. It is a simple case of carrying less in your bag and having the ability to do more. The old argument of less is more sounds rather familiar to most technology companies. Most high-end smart phones now provide their owner the ability to record in HD, which have made the Flip all but redundant.
• There has also been a shift towards real time social networking. You are at an event and you want to make a short video and share it with friends via twitter or facebook.  This is where smart phones have become dominant and Flip had a chance to do so as well. The lack of an internet enabled version really hurt Flip and their survival change.

Rest in peace Flip, I for one will miss you.