Flip Out!?

OK, am I the last to know? Two weeks ago, we just gave our employee a Flip Video for his birthday because he wanted one, and he's a videographer, and a young guy who likes cool and convenient gadgets. It was even branded with Tina Malia's image. He was psyched!

So then I am out yesterday and I hear that Cisco killed the Flip Video. WHAT?! So, I did a bit of on-line research and found out that it was announced almost two weeks ago. Where have I been? So that got me to wondering...

Why did Cisco kill the Flip Video? I mean, I read their Press Release and the company's spin but...

Let's review. Cisco paid $590M for Flip Video TWO years ago. Last year, Flip Video was the top-selling video camera in the US with 26 percent of the market. (Aside-- when I worked at Sony, they used to say that if they had 20 percent of any market they were super accomplished.) All of those sales for Flip only amounted to 2.5 million units sold. I repeat "only" and it's only because the other thing that Cisco is much more known for is their routers and switches. There are none of those in a Flip Video camera. Oh, and let's note that sales were up 15% from the prior year- Wow- and in a recession. But I'm still confused. Why did they kill the company after paying millions a minute ago? And do they do this often? Take a success and buy it to bury it? Oh, and not only did Cisco kill the business, they didn't sell it to someone else and try to get some of their money back. Now I'm really confused. There's got to be more than meets the eye to this, don't you think?

One theory, unspoken by Cisco, of course, is that this inexpensive option for insta-video competed with their very expensive teleconferencing business. The one comparable hurdle is that Flip has no networking capabilities but that doesn't seem like it would have been a big problem for Cisco to solve if they had wanted to. Cisco has several billions of dollars invested in the teleconferencing business on both the higher and the lower end but all B-to-B not B-to-C. On the lower end, they paid $3.2 billion for Webex at a time that Webex had sales of only $380 million, or a multiple of 10x gross revenues! So why would they keep a product for sale (Flip) that sells for $100 that even has the potential for undercutting their larger priced sale? Now THAT sounds like a strategy. Buy, try, re-think and flush. Buh-bye Flip. RIP.