Cisco shuts down Flip video unit
Two years after paying $590 million for its Flip video camera unit, Cisco Systems Inc. is shutting it down as part of a major retreat from the consumer electronics market.
Cisco, based in San Jose, Calif., will lay off 550 workers as part of the restructuring. It's unclear whether any of them are based in the Boston area. The company has more than 2,000 employees in the state, mainly working on telecommunications and networking equipment and software. Cisco has acquired 14 companies in Massachusetts since 1994, including its 2009 purchase of cellular data networking company Starent Networks for $2.9 billion.
Apart from killing off the Flip, Cisco will retarget its new Umi teleconferencing product as a product for business use, abandoning efforts to sell it to consumers. The company will continue to sell its line of Linksys home networking equipment, but will focus on marketing it as a service for delivering Internet video to the home.
Cisco expects to take a $300 million charge during the third and fourth quarters of 2011 to cover costs of the restructuring.
The original Flip video cameras fit into a shirt pocket, ran on a couple of AA batteries, and produced high-quality, standard definition videos. Brought to market in 2007 by Pure Digital Technologies Inc., the Flip soon became wildly popular, especially after TV personality Oprah Winfrey praised the cameras and handed out free samples to the audience at a taping of her show.
In March of 2009, Cisco acquired Pure Digital as part of a larger push to expand beyond its traditional business of selling high-end networking gear to giant corporations. But Flip's popularity began to wane, as consumers embraced smartphones like the Apple Inc. iPhone and phones using Google Inc.'s Android software. Such phones generally contain high definition video cameras, eliminating the need to purchase a separate device.