Cisco announced Tuesday that it will stop making the Flip video camera, a move marking the tech giant’s shift away from consumer electronics.
The company acquired the Flip when it bought its maker, Pure Digital, for nearly $600 million just two years ago. At that time, the pocket-size camera was hailed by the tech-savvy as a convenient way to take short videos and share them on Web sites such as Facebook and YouTube.
Then, the smartphone appeared on the scene. With devices like Apple’s iPhone 4 offering high-definition video recording, consumers found they had little need for a separate gadget that required a computer to upload video. Smartphone users can upload and share video across social networking sites with a few finger swipes. In short, the Flip was a one-function device in an multi-function era when even point-and-shoot cameras can also act as high-definition camcorders.
Cisco spokeswoman Karen Tillman said that the company chose to shut down the division after a thorough review, deciding that closing it was a better move than trying to find a buyer.
The Flip was not Cisco’s only failed effort to rebrand itself as a consumer company. A string of consumer product efforts fizzled despite costly advertising campaigns featuring Ellen Page and P. Diddy. The initiatives hurt the company in the past few years as investors complained that the firm appeared to have lost focus. Indeed, Cisco stock closed Tuesday at $17.44, nearly the same price as two years ago.
In a memo last week, Cisco chief executive John Chambers acknowledged that the company had disappointed its investors and confused its employees.
“Bottom line, we have lost some of the credibility that is foundational to Cisco’s success,” Chambers wrote. “Our market is in transition, and our company is in transition.” He added that the company would have to make tough decisions about the company’s future.
According to the news release, the company expects to lose about $300 million on restructuring and plans to cut about 550 employees. In addition to closing down its Flip business, Cisco is also folding its Umi video conferencing division into another business line.