Why Cisco Killed the Flipcam


Posted on April 14th, by Michael Rosenblum in photography. 3 comments

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.

Pretty cool.

So why did Cisco kill the Flip?

NY Times reporter David Pogue seems to have found out:


April 14, 2011, 2:45 pm

The Tragic Death of the Flip

Did the smartphone, right, kill the Flip camcorder?Left, Eric Risberg/Associated Press; Paul Sakuma/Associated Press Did the smartphone, right, kill the Flip camcorder?

Day before yesterday, my jaw hit the floor, and I still haven’t managed to get it back up again.

Cisco is killing the Flip camcorder.

Let’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 it’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, everybody’s first reaction is: “Oh, it’s because of smartphones. Everybody’s shooting video with iPhones nowadays—nobody’s buying Flip camcorders.”

Or, as Gizmodo puts it, “Cisco just axed Flip, yeah, but the blame should be aimed squarely at the smartphone in your pocket.”

Which sounds logical—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 doesn’t buy iPhones. Of the 1 billion cellphones sold annually, a few million are iPhones. The masses still have regular cellphones that don’t capture video, let alone hi-def video. They’re the people who buy Flip camcorders. It’s wayyyyyy too soon for app phones to have killed off the camcorder.

Second, it isn’t true at all that nobody’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 Flip’s sales; Flips now represent an astonishing 35 percent of the camcorder market. They’re the No. 1 bestselling camcorder on Amazon. They’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 Flip’s popularity, but you don’t see them shutting down.
So why did Cisco kill off the flip?

I’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; that’s why it spent $590 million on Flip. But then, as John Chambers, Cisco’s chief executive, put it, the company decided to make “key, targeted moves as we align operations in support of our network-centric platform strategy.”

Which, in English, means, “We had no clue what we were doing.”

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 Flip’s video quality—for its size and price—was amazing. Maybe, in fact, that was Cisco’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 camcorder—the thing pretty much had only one button, Record/Stop—and also much simpler than an app phone. You’d have this thing filming instantly: no powering up, loading with tape, opening the screen, setting to Record mode, and so on. Then you’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, you’d wind up catching moments you’d have lost with any other gadget. I’ve got all these great videos of my toddler son in the back seat of the car, because he’d suddenly start singing a hilarious made-up song, and I’d grab the Flip from the center console, hit the button, and I’d have it. I would not have had a prayer of getting those songs if I’d had an app phone.

But there’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 you’re in a Wi-Fi hot spot, the entire world can see what you’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 you’re seeing, in real time—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.

Nice.

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 they’ll chop you up and sell off your parts.

Or, in Cisco’s case, much worse: chop you up and leave you for dead.

I loved the Flip. May it rest in pieces.





3 thoughts on “Why Cisco Killed the Flipcam

  1. This reminds me of the old VCR days.

    “Better” was the Sony Betamax system. Much better image. Longer recording time. But the business guys gave deep discounts to the traditional VCR system. Lesser image. Shorter recording time. Fewer features for the viewer to move back and forth with the recording to watch the show.

    It was all about the business game of dollars and who would dominate the market.

    “Better”, then, did not win.

    I’m not saying the Flip is better. I’ve seen other articles pointing out how the Flip was behind the curve with it’s wifi offerings. Not meeting the needs of the up and coming generation/client base. But there are still folks who love their Flips.

    Business, whether it’s small consumer cameras or large broadcast networks don’t always see the profit in giving customers “better”. What’s better for them is control over the marketplace and profits. Which sounds counterintuitive but shows the rest of us a truly “free market” doesn’t always exist.

    • Well, remember that betamax became betcam and VHS became MII. Maybe one day there will be a broadcast flip. Weirder things have happened.

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Every day Michael Rosenblum blogs about the latest developments in the world of video and the media as well as future trends in technology and equipment.



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