General Question

iamthemob's avatar

Why would Cisco kill the Flip cam?

Asked by iamthemob (17159points) April 13th, 2011

This week, Cisco announced that it would be killing off production of it’s popular Flip Cam line.

Much of the reasoning was due to the fact that smart phone video has eaten into the market share. But Cisco seems to have forgotten what makes the Flip, and it’s software great – it’s made for simple shooting, and fast seamless upload and sharing on various fronts.

I feel like a great product is being killed because the parent wants to take a deduction.

See an article on the organizational structure issues of Cisco here.

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9 Answers

arij's avatar

I have a flip and I haven’t used it for a while. I found that it was more practical to have one device that does it all instead of carrying many.

http://mashable.com/2011/04/12/rip-flip-camera/

funkdaddy's avatar

I think it would be tough to know if a deduction drove the move, it could be, I just don’t know how much of a factor that is compared to a shrinking section of their business and trying to focus on other things. Didn’t Cisco have something of a tough year anyway? Do they need additional deductions? It seems the 500ish jobs would be a bigger contributor to the bottom line.

My immediate thought was that they just don’t really know how to market to consumers and so are shedding some of those parts of their business. They went on a bit of buying spree trying to expand from their corporate identity and (as far as I know) none of the brands have really flourished.

It seems a bit rash thought unless there’s parts that aren’t quite public yet.

I can’t believe that no one would buy the business from them at some sort of price, so you may be on to something with the write off. I was wondering if perhaps there’s something in the purchase contract (when they bought the business) that precludes the sale or makes it difficult? For example if they have to buy out high level folks at a high price it makes the sale a lot less viable for them? You know more about this stuff than I do, but that was my first thought.

Would you be surprised if some of the original flip team picked it back up? I just don’t buy that there’s no niche for the product, maybe it’s just not a big enough niche for Cisco?

Jeruba's avatar

I think it’s because the Flip was taking Cisco too far away from its core technologies and not giving them a big enough market share.

Cisco has a philosophy of entering a market only if it can be number 1 or number 2 in that market. If Flip didn’t fulfill that goal, they wouldn’t stay with it.

The article in my (Silicon Valley) newspaper today said that it would cost them less to dismantle the Flip operation than to sell it now that a lot of the Flip’s features are being taken over by smartphones.

I don’t think Cisco decides rashly. They can be wrong in their decisions, but not, I think, impulsive. But don’t expect ever to know the full story behind a decision made by such a corporate giant.

This was the first of a number of “difficult decisions” we’ll be hearing from Cisco following a series of disappointing quarters. The annual layoff season is coming up, too.

dabbler's avatar

as @Jeruba touches on, no one needs the Flip for its features anymore. They used to be novel enough to be compelling, now most phones and digital cameras can do a the job of making a good short video so who needs a separate gadget.

iamthemob's avatar

@dabbler – I don’t know – there are several markets that smartphones don’t really touch on, as older parents/grandparents and families with young children, as well as schools, have a distinct use for a dedicated, simple, digital universal platform that can record long amounts of videos.

funkdaddy's avatar

I don’t know, it seems like you’re dismantling the business anyway to get rid of it.

Does it cost less to not look for a buyer and all that’s involved? Absolutely. But does the sale price more than pay for those additional costs? I would think so.

If you’re throwing it in the dumpster anyway, is it that much harder to put it on the curb with a sign that says “slightly used consumer electronics business, $10 million OBO”. I think the highly recognizable brand alone would be worth more than that. Depending on how you define their “market”, you could argue that they are #1 in their space.

Let’s say they assigned a team of 5 to finding a buyer, handling the contract and negotiations, and getting final ok. Even if it takes them a year, how much would they need to get for the business for it to be profitable? 5 people, even at $200k a piece for a full year would still be pretty easy to get a return on. Or hire an outside firm to sell it for a percentage, I simply can’t see that it’s worth nothing.

The terms could be anything from a full handover to “as is, you pick up, never call us again”.

I think there’s more at work here and someone will come out of it with some of the key components. Maybe it was done this way due to some internal power struggle that was causing more damage, but so far this is the sort of thing that will kick off just the sort of reorg the linked article is calling for.

On the other hand, if it was a ploy to get massive media coverage that Flip was available for cheap as long it wasn’t too much trouble, it was pure genius and they probably have dozens of interested parties getting in touch.

btw – not arguing with @Jeruba, just sharing thoughts

Jeruba's avatar

I don’t think there’s any aspect of the question that John Chambers and his team didn’t consider.

Again, not to say they’re always right—obviously not—but unless we’ve been inside and close to the top of an organization like Cisco, we will never see the whole picture. For instance, from an employee morale point of view, shearing away all the employees of one unit could be judged far less traumatic than cherry-picking sacrifices throughout the organization.

I’ve been inside, but only at the bottom. Even there the view is different from the outside.

funkdaddy's avatar

An NYT article about the move, more confusion and some theories as well

http://pogue.blogs.nytimes.com/2011/04/14/the-tragic-death-of-the-flip/

Only a month ago, I was briefed by a Flip product manager on the newest model, which was to hit the market yesterday. He showed me a graph of the Flip’s sales; Flips now represent an astonishing 35 percent of the camcorder market. They’re the No. 1 bestselling camcorder on Amazon. They’re still selling fast.

The most plausible reason is that Cisco wants the technology in the Flip more than it wants the business. Cisco is, after all, in the videoconferencing business, and the Flip’s video quality—for its size and price—was amazing. Maybe, in fact, that was Cisco’s plan all along. Buy the beloved Flip for its technology, then shut it down and fire 550 people.

markylit's avatar

I think Cisco kinda lost focus when it launched Flip. Flip as a product is not that convincing. And it’s kinda difficult to align Flip to Cisco’s core technology and business. The video conferencing things sure sounds great but Cisco is much more bigger and greater than that. A product like Flip doesn’t fit well with the greater technological perspective of Cisco. I guess that’s what Cisco realized and that Flip is not just worth it.

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