Light Reading
For $590 million in stock, Cisco becomes a video camera company

Cisco's Latest Buy: Flippin' Sweet

Craig Matsumoto
News Analysis
Craig Matsumoto
3/19/2009
50%
50%

Cisco Systems Inc. (Nasdaq: CSCO) dived deeply into consumer electronics today, announcing a deal to buy Pure Digital Technologies Inc., maker of the Flip line of handheld video cameras, for roughly $590 million in stock. (See Cisco to Acquire Pure Digital.)

Cisco has sold consumer products before, such as the home router brand now called Linksys by Cisco. But the Flip is a less geeky kind of consumer product and could lead to Cisco's first direct clash with a mammoth consumer player like Sony Corp. (NYSE: SNE).

Rumors of the deal circulated earlier this month. Cisco had already talked about seriously expanding its consumer business, and a debt offering pumped speculation that an acquisition was in the works. (See Cisco Goes Consumer, Cisco Keeps the Service Provider Faith, and Cisco's Got Cash.)

So, why did Cisco do it? It certainly wasn't for the video quality. As Consumer Reports noted when reviewing the Flip Mino in August, the little cameras lack features like good image stabilization. You can see the results at about the 2:15 mark of this video.

Consumer Reports points out that poor video quality is a "deal breaker... unless you're planning to use it only to create videos to post online – where compression will all but eliminate differences in quality between the best and worst home videos."

That's the part Cisco is counting on. Pure's mission as part of the digital fold would be to help consumers shovel more video -- especially high-definition video -- onto the net, regardless of whether it's any good. That, in turn, could increase service providers' demand for more routers with video-minded features.

The Flip satisfies that account, because it comes with software tailor-made for posting to Internet sites.

The deal is expected to close by the end of July. Pure would be included in Cisco's consumer group, the home of the Linksys by Cisco brand. Pure CEO Jonathan Kaplan would become general manager of the group, reporting to senior vice president Ned Hooper.

— Craig Matsumoto, West Coast Editor, Light Reading

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Stevery
50%
50%
Stevery,
User Rank: Light Beer
12/5/2012 | 4:08:45 PM
re: Cisco's Latest Buy: Flippin' Sweet



Did chambers make a statement about not personally profiting from PureDigitals stock in the acquisition?




How about anybody on the csco M&A team?




Shareholders should be livid about the stupid price and the self-dealing.- It is time for the limiteds in these deals to be exposed.


abashford
50%
50%
abashford,
User Rank: Light Beer
12/5/2012 | 4:08:45 PM
re: Cisco's Latest Buy: Flippin' Sweet



It appears this video camera is the 'iPod' of the video camera world... very simple to use and integrate with the web, and a similar minimalist aesthetic.




So it sounds interesting as a potentially successful stand-alone business, but I really don't see the connection with Cisco as a business.- You bring out the point of 'shoveling more video', but this would happen without Cisco's name behind the unit.




From a networking standpoint, if the device had WiFi or even an Ethernet jack I could see more of a symbiosis with Cisco's 'network as the platform' messaging, but it has a USB port, that is it.- This one just doesn't go clunk for me.




Is there any key video processing IP that they may want to get their hands on?


googol_byte
50%
50%
googol_byte,
User Rank: Light Beer
12/5/2012 | 4:08:43 PM
re: Cisco's Latest Buy: Flippin' Sweet


OK, they have over $30B in cash, so why use stock for a $500M acquisition.

-

I actually read an anlalyst comment that said they were "conserving cash for other deals". -What deal is Cisco going to do that requires $30B in cash?-

sigint
50%
50%
sigint,
User Rank: Light Beer
12/5/2012 | 4:08:41 PM
re: Cisco's Latest Buy: Flippin' Sweet



"From a networking standpoint, if the device had
WiFi or even an Ethernet jack I could see more of a symbiosis with
Cisco's 'network as the platform' messaging, but it has a USB port,
that is it.- This one just doesn't go clunk for me."





_________________________________________________________________________________




 




Pure speculation, but I'm guessing that since Cisco saw some success with Telepresence, they are pursuing video seriously. Application typically uses fixed cameras, so no image stabilisation necessary. Maybe a 'telepresence lite' for homes and value markets.-




Again, to emphasise, pure speculation on my part.




PS: Adding an ethernet port/wifi should be a trivial fix.-


Pete Baldwin
50%
50%
Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 4:08:40 PM
re: Cisco's Latest Buy: Flippin' Sweet



Theory #2: Cisco sees a future of networked consumer electronics and wants to beat Sony to that place, essentially becoming the new Sony (or Apple) of the 2010s.




This one probably has several sleep-deprived holes in it, but I'll toss it up there for discussion anyway.-


Pete Baldwin
50%
50%
Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 4:08:40 PM
re: Cisco's Latest Buy: Flippin' Sweet
I like sigint's theory about telepresence.- And I agree Cisco pretty much has to add Ethernet or Wifi to the cameras -- here's a blog that thinks the wifi part would be a good idea: http://bit.ly/swj8



Even so, as abashford points out, uploading video to the web is going to be popular pretty much no matter what, and it's going to go in an HD direction all by itself.- This isn't like Intel & Wimax, where Intel had to back a standard and force feed it to the industry.




Cisco must have some grand vision for these cameras' evolution, one that Sony can't or won't follow.- (Because if it was obvious enough for Sony to do it, Cisco wouldn't go through this trouble, right?)


vlui13280
50%
50%
vlui13280,
User Rank: Light Beer
12/5/2012 | 4:08:39 PM
re: Cisco's Latest Buy: Flippin' Sweet



If you put the networking stuff aside, does the Scientific Atlanta STB not have a USB port??




ANd for Cisco to keep growing this rate for the next 5 yrs, where do they stand on wireless backhaul and LTE?


Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Interviews
From 4G to 5G: Alcatel-Lucent's Dave Geary

11|25|14   |   09:09   |   (1) comment


Dave Geary, President of Wireless at Alcatel-Lucent, talks about the evolution of the 4G market, small cells, partnerships, 5G and the IoT.
LRTV Huawei Video Resource Center
Building a Secure Telefonica Network With Huawei's High-End Firewall

11|24|14   |   4:37   |   (0) comments


Andrew Davies, IP architect of the Telefonica, a leading digital communications company, discusses the Huawei security gateway solution and putting the solution into the testbed.
LRTV Huawei Video Resource Center
Huawei Partners with Spirent to Verify CE12816's 10GE Port & TRILL Networking Capabilities

11|24|14   |   2:50   |   (0) comments


Spirent Communications is the world's leading supplier for telecom testing appliances and solutions. Spirent has been in a close partnership with Huawei for a long time.
LRTV Huawei Video Resource Center
Saudi Airlines & Its ICT Transformation

11|24|14   |   2:07   |   (0) comments


In this video, Saudi Airlines discusses its network problems and how Huawei's Agile Network is its all-in-one solution.
LRTV Huawei Video Resource Center
Huawei's Agile Switch Benefiting Saudi Arabia's Yamamah Hospital

11|24|14   |   2:40   |   (0) comments


Saudi Arabia's Yamamah Hospital speaks about how Huawei's Agile Switch has improved the medical service's network infrastructure.
LRTV Huawei Video Resource Center
FanPlay & Huawei Build a Wireless Agile Smart Stadium

11|24|14   |   2:13   |   (0) comments


FanPlay is a cloud-based white label service, which is effectively a football fan engagement platform underpinned by mobile payment technology.
LRTV Huawei Video Resource Center
Building an Agile Stadium

11|24|14   |   3:54   |   (0) comments


Stadiums may be thousands of tons of concrete and steel, but they now need to be agile. Being at the stadium may not be as alluring as it once was. Sports franchises and stadium operators discuss how to get fans back.
LRTV Huawei Video Resource Center
Huawei Helps ChinaCache Tackle Challenges in the Internet Industry

11|24|14   |   3:09   |   (0) comments


ChinaCache is China's largest content distribution network supplier. Huawei's CE12800 has provided ChinaCache with very strong support in its establishment of an infrastructure network.
LRTV Huawei Video Resource Center
Cefinity on Managed Security Services & Next-Generation Firewall

11|24|14   |   7:05   |   (0) comments


Cefinity is a cloud management service provider in Southeast Asia. Ivan Zhang, CEO of the company, discusses the implementation of security service management in the cloud era.
LRTV Huawei Video Resource Center
Huawei's Agile Gateway in the Eyes of Cefinity

11|24|14   |   2:11   |   (0) comments


Cefinity is a managed service provider for enterprise networks. The company currently uses Huawei's AR series routers for the most complete range of functions. CEO Ivan Zhang speaks about the advantages of the AR series routers.
LRTV Huawei Video Resource Center
CTO of Bus-Online Talks About Huawei's Agile Gateway

11|24|14   |   2:53   |   (0) comments


Bus-Online covers around 100 million users everyday. In addition to providing mobile TV, and advertising services to the public, Bus-Online has also entered the field of mobile Internet.
LRTV Huawei Video Resource Center
Amsterdam ArenA as an Agile Campus

11|24|14   |   3:31   |   (0) comments


The Amsterdam ArenA, home of the Ajax soccer team, can be a crowded space. ArenA has partnered with Huawei to work on bringing ample bandwidth to 53,000 people at the same time.
Upcoming Live Events
December 2, 2014, New York City
December 3, 2014, New York City
December 8-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
April 14, 2015, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
Irish Telecom outlines the rise of VoIP technology, including its adoption within businesses and their perception of its quality.
Hot Topics
$38.3M: Ain't That a Kik in the SMS
Sarah Reedy, Senior Editor, 11/20/2014
Do You Have a 2020 Vision?
Dennis Mendyk, Vice President of Research, Heavy Reading, 11/21/2014
Net Neutrality Even Mark Cuban Could Love
Mitch Wagner, West Coast Bureau Chief, Light Reading, 11/26/2014
Amazon Eyes Ad-Supported Video – NY Post
Mari Silbey, Independent Technology Editor, 11/25/2014
$35B+ Spectrum Auction Dings Verizon, Shines Dish
Dan Jones, Mobile Editor, 11/24/2014
Like Us on Facebook
Twitter Feed