Cisco put on quite a show with its Flip shutdown, and analysts gave it a mixed rating. The decision to close Flip was seen by many as a move to show everyone that Cisco is serious in its restructuring plan, primarily to save the organization from the bad luck of quarterly financial losses. But, this move that slashed more than 500 jobs and axed 2 executives including Flip’s founder Jonathan Kapplan, is deemed senseless by Anthony DeMarco of Forbes.com. The sacrificial stunt sprung from a bad decision to acquire Flip makers Pure Digital worth $590 million in 2009.
Cisco’s spokesperson Karen Tillman explains Flip shutdown as part of their strategy saying, “We will be substantially reducing our investment in the consumer market as a stand-alone business and will invest in it only in partnership with enterprise and service providers customers.”
Other experts think otherwise. In an interview with eWeek, Charles King, principle analyst at Pund-IT Research, sees this move as a strategy of Cisco to tell the world that they are back in control and is ready to concentrate on the enterprise space and leave consumer business. Another expert from the Yankee Group, Zeus Kerravala said, “When you look at Cisco, it made its living selling to corporations and service providers.” He points out that only change will fuel Cisco’s commercial’s engine again.
Pixbaility, an online video and marketing company that has utilized Flip’s services to create their clients’ video content, reveals how the shutdown of Flip would affect their business model. “We do use Flip cameras for creating our videos but – in a moment of strange foresight – we had taken the Flip camera out of our central marketing message on our homepage in January 2011,” explains Pixability CEO Bettina Hein .
“We believe Cisco is wrong in shutting down a profitable division with a wonderfully designed, simple product. Currently, smartphone video can’t compete with the quality and speed of the Flip HD yet – it’s just too impractical. Frankly, though, I’m not surprised that this has happened. When Cisco acquired Pure Digital I suspected that Flip wouldn’t have much of a chance in a company that has been focused on enterprise-level products. Still, it seems incredible to me as an entrepreneur that Cisco would spend almost $600 million on an acquisition to shut it down after 2 years. I would have at least have expected them to sell the unit – perhaps to Kodak or another CE manufacturer.”
Varying shots have been thrown Cisco’s way, and this certainly reflects the backlash large companies face when justifying decisions that have a large internal and commercial impact. It’s pronouncement to end Flip may have harnessed mixed reviews from many analysts, but one thing is definite—the move is newsworthy, and indicative of Cisco’s coming plans for restructure.
[...] Cisco beleaguered, is a result of unprecedented growth of iPhone and Android devices. Although smartphones can’t compete with Flip in terms of quality, it still faced extinction. To prevent themselves from going the way of the [...]