Cisco is shuttering its Flip camera business and axing 550 jobs.
According to Reuters, "Cisco Systems Inc will shut down its Flip video camera business in an overhaul of its troubled consumer products business, following chief John Chambers' recent admission that the company had lost its way."
As part of this restructuring, Cisco will close Flip, laying off 550 jobs of its 73,000 people; refocus its home networking business to better fit with its core networking business; and realign its TelePresence business. Cisco will take a $300 million charge as part of the restructuring.
Stephen Baker, NPD's vp of industry analysis, expressed shock at Cisco's decision to shutter Flip. "It's hard to believe there wasn't a buyer out there for it considering its volumes and revenues."
At U.S. retail, Flip had 22.5 percent portable video market share in 2010, as measured in units, down from 23.9 percent a year earlier. While unit volumes were flat year over year, they were up three times from 2008.
Cisco bought Flip in March 2009 in one of two major pushes into the consumer market. The other was the acquisition of Linksys.
When Apple launched iPhone 4 last year, CEO Steve Jobs poked at Flip during his presentation. Apple's smartphone does 720p video capture with stereo audio. Less than a year later, Flip is done. I don't suggest that iPhone killed Flip, but I won't be surprised to see such reasoning put forth today, particularly among the Apple fan club of bloggers and journalists.
That said, surely the broader market for cameras and cameraphones with HD capabilities played a role, "Cameraphones are likely an issue in the future," Baker said. "If Flip was struggling today then it was because of cameraphones." If.
Here';s what actually happened:
Everyone got a smartphone with 720p video recording. Plus, FaceTime… Yes, video enthusiasts will always opt for standalone camcorders, but the majority of regular consumers don't need a Flip because they can shoot kitten videos in 720p using a smartphone.