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Cisco decides to Flip out

Flip appears to have been a flop for Cisco, as the networking giant ditches the camera business.

By Tom Brewster, 12 Apr 2011 at 16:52

Cisco Systems has decided to ditch its Flip camera business as it seeks to realign its operations following weak performances over the past year.

A reported 550 jobs are set to go as a result of Flip’s demise, which comes after an internal email from Cisco chief executive (CEO) John Chambers called for the company to make changes urgently.

In what some described as Cisco’s “burning platform moment,” Chambers warned staff to prepare for a number of changes to ensure the networking giant does not let investors down again.

“We are making key, targeted moves as we align operations in support of our network-centric platform strategy," Chambers said today.

"As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimise and expand their offerings for consumers, and help ensure the network's ability to deliver on those offerings."

Cisco bought Flip creator Pure Digital in 2009 for $590 million (worth £409 million at the time) after years of making moves in the consumer space – an area the firm now plans to distance itself from.

At the time, many questioned why Cisco was moving further into the consumer space when its strengths lay in networking.

This morning, Cisco said it would realign its other consumer divisions to support four of five key company priorities - core routing, switching and services, as well as collaboration, architectures and video.

As for why Cisco ditched Flip cameras, the firm gave no particular reason, although the growth of camera-enabled smartphones may be a significant factor, alongside the need for restructuring.

Cisco's past two quarterly results have disappointed the market and in November the company said its sales growth would not be as high as analysts expected.

The firm has faced increasingly stiff competition in recent years, thanks to tech giants like HP making bigger plays in the networking market.

The move away from the consumer space may also bring into question the future of Cisco's tablet, known as the Cius.

According to various reports, the Cius is due to hit UK shores in the second quarter of 2011, but there was no official line from Cisco on a launch date.