The Flip Side of Flip’s Demise: Discipline

The announcement that Cisco was shuttering the Flip video camera has the media and other industry watchers buzzing.  How could something so successful just go away?  “RIP” tweets and Facebook posts are in abundance following the April 12 announcement. Many are asking: Why didn’t Cisco at least sell the Flip to a consumer electronics company? I suppose our 2010 Webinar on how to use the Flip camera won’t get much on-demand registrations, so PR News is also affected by this news. Seriously, though, Cisco has made a very interesting move. I can’t say it cut its losses, because the product it acquired in 2009 was generating a reported $400 million in sales at a 30% margin, give or take. Cisco, which is a leader in the Internet infrastructure space, took a chance with the Flip, entering the crowded and competitive consumer electronics market and diverting its resources away from its core business, at a time when its market share there has been threatened. There hasn’t been much news or developments coming from the Flip team – the last press release was in early December 2010.

With its stock price sliding, Cisco CEO John Chambers warned last week in an internal memo that tough and bold decisions were going to be made soon. And he admitted that the company needed more “discipline.” Recognizing that more consumers were using their smart phones for video while their Flips were gathering dust in the junk drawer, Cisco seemingly made the right call to right its ship and focus on what it knows, what it does best, and what will make shareholders happy. In the memo, Chambers noted that the company needed to regain focus and employee confidence. Flipping the Flip was the first move in what appears to be Cisco sticking to its knitting.

— Diane Schwartz