Cisco Flip-Flips- "Sound Reasoning" lasts two years

The Halo Effect in Full Force- thanks to the Business World's Love for Cisco...

First, the high praise...

How Cisco's CEO John Chambers Is Turning the Tech Giant Socialist: "...Cisco, Chambers argues, is the best possible model for how a large, global business can operate: as a distributed idea engine where leadership emerges organically, unfettered by a central command. Chambers and his team have been sharing detailed case studies of their experiences and best practices with the likes of AT&T, General Electric, and Procter & Gamble, and with customers in emerging markets from Russia and China to Mexico and Brazil. 'We did it first ourselves; now we teach our customers. And the neat thing about it is that they'll use our technology to do it.'

An avowed Republican (and a cochair of John McCain's presidential campaign), Chambers politely ignored my observation that Cisco's new regimen feels a bit like a socialist revolution. But Chambers did kick off the analyst conference with a slide that read, collaboration: 'co-labor'; working toward a common goal. In language and spirit, Chambers's transformation is a mashup of radical isms and collectivist catchphrases. Of course, with analysts suggesting that the 'collaboration marketplace' could be a $34 billion opportunity, it's radicalism of a reassuringly capitalist bent...."

Followed by

Cisco Buys Flip Video Cam Maker for $590 Million: "By Kit Eaton
Cisco Systems, most commonly associated with business technology infrastructure and networking hardware, is using a chunk of its massive cash reserves to buy Pure Digital Technologies--creators of the highly popular Flip range of cheap digital video camcorders.

If it sounds like the two make strange bedfellows, then think again: Cisco's reasoning is sound. Pure Digital's Flip range was a surprising "revolution" in the photography market--representing a simple, low-end re-think of video tech in light of the popularity of online videos through YouTube and its ilk. The company sold 1.5 million of the "one-button" camcorders in just 18 months, earning a 2008 revenue of 150 million, and that pushed it to thenumber seven slot on our list of the 50 most innovative companies [0].

Cisco, which jumped from #37 to #5 on our list of the 50 Most Innovative Companies this year [0], says Pure Digital has now sold over two million of its cameras in the U.S. and that success is why the company is today ponying-up $590 million to purchase all of Pure Digital's privately-held shares. A further $15 million is being spent on "retention-based incentives" to employees who stay at Pure--a clear indication that Cisco appreciates the company's success, and a hint of some remaining autonomy. After all, Cisco is new in the digital camera market. Which is why Pure is a clever purchase: The main product is novel and doing well in a cluttered marketplace, and it gives Cisco direct access to a bigger share of the consumer electronics arena.

And that's exactly the plan it seems. As Cisco's senior VP of Corporate Development and Consumer groups, Ned Hooper, said in a stunning example of corp-speak: "This acquisition will take Cisco's consumer business to the next level..." And Pure is likely to be just one of a number of acquisitions as Cisco's reported to have $29 billion in cash on its books, which is a powerful fighting fund Cisco says it's keen to spend on expansion. Expect to see more of the company's stick-like Golden Gate logo on your consumer electronics in the coming year or two..."

Two years later, the story reverses...

Chambers: Cisco has lost credibility - 06 Apr 2011 - CRN UK News: "John Chambers will make a series of changes at Cisco after admitting in a candid email to staff that the networking giant has lost its way.
In an extraordinary 1,473-word missive, Cisco's chief executive confessed the $40bn vendor had been slow to make decisions and had lost accountability.
'Bottom line, we have lost some of the credibility that is foundational to Cisco's success - and we must earn it back,' he said...."

Followed by the Flip-Flip

Cisco to Close Flip Video-Camera Business as Part of Consumer-Unit Revamp - Bloomberg: "Cisco Systems Inc. (CSCO), the world’s biggest maker of networking equipment, will close its Flip video-camera unit and cut about 550 jobs as it reorganizes its consumer businesses.

Pretax costs from the revamp won’t likely top $300 million during the third and fourth quarters of fiscal 2011, San Jose, California-based Cisco said today in a statement. Cisco will realign its remaining consumer business to support core routing, switching and services, collaboration, architectures and videos..."

FT.com / Technology - Cisco to close Flip video camera arm: "...At the time, the lightweight video camera was hailed by Cisco as an important part of its plan to create “end-to-end” networks that involve it capturing as well as transmitting video. However, Wall Street was never convinced of the need to sell consumer gadgets and the once hot Flip device has since been overtaken by video recorders embedded in smartphones like the iPhone..."