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Cisco gives Flip video biz the boot

The company is ditching its Flip video camera business, which it bought for $590 million just two years ago, as it makes "tough decisions" meant to get it back on track.

Flip video camera lineup
Pure Digital

The first cuts to Cisco Systems' business have been announced, and the Flip video camera is among the first items to go.

Cisco announced today that it will exit parts of the consumer electronics business as it strategically realigns its business to focus on five main areas: core routing; switching and services; collaboration; architectures; and video. One of the first casualties of this plan was the Flip video business, which Cisco bought from Pure Digital two years ago for $590 million.

Cisco said in the press release that it will "support current FlipShare customers and partners with a transition plan." But the company will stop selling the tiny video camera. Instead, Cisco plans to refocus its consumer business on home networking technologies, such as Linksys, and integrate the Cisco Umi home video conferencing product into its Business Telepresence offering.

"We are making key, targeted moves as we align operations in support of our network-centric platform strategy," CEO John Chambers said in a statement. "As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimize and expand their offerings for consumers, and help ensure the network's ability to deliver on those offerings."

Cisco's decision to shutter the Flip video business should come as no surprise. The company bought Pure Digital just as high-definition video cameras started to become commonplace on mobile devices. Today, smartphones, such as the iPhone, offer HD video and they also make it easy to load video directly to social-networking Web sites like Facebook and YouTube.

Last week, Chambers published a blog on the company's internal Web site acknowledging that the company has "disappointed our investors and confused our employees." And he promised to get Cisco back on track. Chambers said that "we will take bold steps and we will make tough decisions."

The Flip video business isn't the only head that's on the chopping block. Cisco also said that it will shut down the Eos media solutions business and use the technology elsewhere in the company. The Eos business was targeted at entertainment companies. It was a set of technologies and development platform that helped bands and record labels create websites.

The head of this division, Dan Scheinman announced on Twitter Tuesday morning that he will be leaving Cisco after more than a decade at the company. Previously, Scheinman headed up Cisco's acquisitions and helped the company acquire more than 40 companies, including Lynksys and Scientific Atlantic.

In his tweet Scheinman said that Eos had succeeded technically, but was still years away from succeeding economically.

Related links
• CEO admits Cisco has lost some credibility
• Cisco cuts pricing on HD home videoconferencing
• Cisco buys Flip Video maker for $590 million