Why Cisco Killed the Flipcam
Like an episode of House
You have to wonder why Cisco killed the Flip.
Sales were up.
So up, in fact, that the Flip controlled 35% of the camcorder market.
And, apparently, Flip was going to release a really awesome new Flip tomorrow – one that livestreamed directly to the web.
So why did Cisco kill the Flip?
NYÂ Times reporter David Pogue seems to have found out:
April 14, 2011, 2:45 pm
The Tragic Death of the Flip
Day before yesterday, my jaw hit the floor, and I still havenâ€™t managed to get it back up again.
Cisco is killing the Flip camcorder.
Letâ€™s see if I can get this straight. Only two years ago, Cisco bought Pure Digital, the company that made the Flip, for $590 million. Then, on Tuesday, Cisco announced that itâ€™s shutting down the whole division and laying off 550 people.
We humans are a rational species. Our instinct is to find reasons, to seek patterns where none may exist. In this case, everybodyâ€™s first reaction is: â€œOh, itâ€™s because of smartphones. Everybodyâ€™s shooting video with iPhones nowadaysâ€”nobodyâ€™s buying Flip camcorders.â€
Or, as Gizmodo puts it, â€œCisco just axed Flip, yeah, but the blame should be aimed squarely at the smartphone in your pocket.â€
Which sounds logicalâ€”until you realize there is a far more satisfying explanation.
First, app phones like the iPhone represent only a few percent of cellphone sales. You know who buys app phones? Affluent, East Coast/West Coast, educated, New York Times-reading, Gizmodo-writing Americans.
But most of the world doesnâ€™t buy iPhones. Of the 1 billion cellphones sold annually, a few million are iPhones. The masses still have regular cellphones that donâ€™t capture video, let alone hi-def video. Theyâ€™re the people who buy Flip camcorders. Itâ€™s wayyyyyy too soon for app phones to have killed off the camcorder.
Second, it isnâ€™t true at all that nobodyâ€™s buying Flip camcorders. So far, 7 million people have bought them. Only a month ago, I was briefed by a Flip product manager on the newest model, which was to hit the market yesterday. He showed me a graph of the Flipâ€™s sales; Flips now represent an astonishing 35 percent of the camcorder market. Theyâ€™re the No. 1 bestselling camcorder on Amazon. Theyâ€™re still selling fast.
Look at it this way: There are plenty of Flip copycats, from Kodak and other companies. They have only a fraction of the Flipâ€™s popularity, but you donâ€™t see them shutting down.
So why did Cisco kill off the flip?
Iâ€™ve spoken to a bunch of people in the industry, trying, in my human way, to figure out the logic here. It seems clear that Cisco, whose primary focus is making networking equipment for businesses, was all excited about getting into the consumer electronics game; thatâ€™s why it spent $590 million on Flip. But then, as John Chambers, Ciscoâ€™s chief executive, put it, the company decided to make â€œkey, targeted moves as we align operations in support of our network-centric platform strategy.â€
Which, in English, means, â€œWe had no clue what we were doing.â€
All right, fine. Cisco bit of more than it could chew. But why is it killing the Flip and not selling it?
The most plausible reason is that Cisco wants the technology in the Flip more than it wants the business. Cisco is, after all, in the videoconferencing business, and the Flipâ€™s video qualityâ€”for its size and priceâ€”was amazing. Maybe, in fact, that was Ciscoâ€™s plan all along. Buy the beloved Flip for its technology, then shut it down and fire 550 people.
You already know the first part of the tragedy. The Flip was a great product. Much simpler than a camcorderâ€”the thing pretty much had only one button, Record/Stopâ€”and also much simpler than an app phone. Youâ€™d have this thing filming instantly: no powering up, loading with tape, opening the screen, setting to Record mode, and so on. Then youâ€™d pop out the built-in USB connector to transfer the footage to your Mac or PC: no hunting for a cable, setting to PC mode, and all that. Built-in software let you chop off the bad parts and post to YouTube with a couple of clicks.
Because it was so quick and simple, youâ€™d wind up catching moments youâ€™d have lost with any other gadget. Iâ€™ve got all these great videos of my toddler son in the back seat of the car, because heâ€™d suddenly start singing a hilarious made-up song, and Iâ€™d grab the Flip from the center console, hit the button, and Iâ€™d have it. I would not have had a prayer of getting those songs if Iâ€™d had an app phone.
But thereâ€™s a second part of the tragedy, too, something that nobody knows. That new Flip that the product manager showed me was astonishing. It was called FlipLive, and it added one powerful new feature to the standard Flip: live broadcasting to the Internet.
That is, when youâ€™re in a Wi-Fi hot spot, the entire world can see what youâ€™re filming. You can post a link to Twitter or Facebook, or send an e-mail link to friends. Anyone who clicks the link can see what youâ€™re seeing, in real timeâ€”thousands of people at once.
Think how amazing that would be. The world could tune in, live, to join you in watching concerts. Shuttle launches. The plane in the Hudson. College lectures. Apple keynote speeches.
Or your relative could join you for smaller, more personal events: weddings. Birthday parties. Graduations. First steps.
And the FlipLive was supposed to ship yesterday. April 13. The day after Cisco killed the Flip.
I loved the Flip. I loved that its creators, year after year, resisted the urge to gunk it up with complexity and featuritis. I love that it never, ever let me down. I loved that this startup company created something that changed the world, and ultimately reaped the rewards in popularity and sales.
Unfortunately, it also reaped the rewards that come from selling to a megalithic corporation like Cisco. Yes, there was plenty of money to go around, but also the risk that always comes when you sell to a bigger company: that theyâ€™ll chop you up and sell off your parts.
Or, in Ciscoâ€™s case, much worse: chop you up and leave you for dead.
I loved the Flip. May it rest in pieces.