Light Reading

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        ADD A COMMENT
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.-á 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.-á 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.-á 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". -áWhat deal is Cisco going to do that requires $30B in cash?-á

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.-á 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.-á




Again, to emphasise, pure speculation on my part.




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


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.-á


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.-á 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.-á 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.-á (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?


From The Founder
Against the odds, Huawei is growing its telecoms networking equipment business in the US -- that should be ringing some alarm bells for domestic vendors.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
Between the CEOs
CEO Chat With Jeff Miller, ActiveVideo

8|28|15   |   19:05   |   (0) comments


Jeff Miller, President and CEO of ActiveVideo, talks to Light Reading founder and CEO Steve Saunders about the impact of virtualization on the TV and video distribution market.
LRTV Huawei Video Resource Center
Vodafone: Mobile Money Is About Customer Trust

8|27|15   |   06.36   |   (0) comments


Light Reading spoke with Vodafone's Ian Ravenscroft about the unique responsibilities and opportunities facing operators handling customers' financial transactions over the network.
Telecom Innovators Video Showcase
Palo Alto Networks on Expanding in the Carrier/Service Provider Market

8|26|15   |   07:54   |   (0) comments


Alfred Lee from Palo Alto Networks tells Steve Saunders about their new chassis-based system, the PA-7080, and how it can benefit service providers compared to legacy firewalls.
LRTV Custom TV
Global Services Forum Preview

8|25|15   |   02:36   |   (0) comments


Light Reading's CEO and Founder Steve Saunders talks about Huawei's upcoming Global Services Forum with the help of Heavy Reading's Patrick Donegan and Teresa Mastrangelo.
Telecom Innovators Video Showcase
Infoblox on DNS Threat Index

8|19|15   |   04:39   |   (0) comments


Dilip Pillaipakam from Infoblox talks to Steve Saunders about his company's core network services.
Between the CEOs
CEO Chat With Ihab Tarazi, Equinix

8|14|15   |   20:18   |   (1) comment


Equinix CTO Ihab Tarazi talks to Light Reading founder and CEO Steve Saunders about the dramatic changes in the data center, cloud and interconnect markets and discusses the impact of SDN and NFV in the coming years.
Telecom Innovators Video Showcase
The Netformx Ecosystem

8|14|15   |   09:39   |   (1) comment


Ittai Bareket, CEO of Netformx, talks with Steve Saunders about the Netformx Ecosystem, which employs cutting-edge prescriptive analytics to help solution providers maximize profits.
Telecom Innovators Video Showcase
Versa Networks on Leveraging VNFs

8|12|15   |   07:37   |   (0) comments


Kumar Mehta, founder and CEO of stealth mode startup Versa Networks, talks with Steve Saunders about how providers can best leverage virtualized network functions (VNFs).
LRTV Custom TV
Transforming the Network Through OPNFV

8|5|15   |   7:09   |   (0) comments


Sandra Rivera, VP Data Center Group; GM Network Platforms Group, Intel Corporation, on OPNFV Arno and how the industry is coming together to accelerate the deployment of NFV and transform the network.
LRTV Huawei Video Resource Center
Huawei ONS Product Demo

8|3|15   |   6:01   |   (0) comments


Huawei shows at Open Networking Summit 2015 in Santa Clara how its SDN and NFV solutions embrace openness.
LRTV Custom TV
End-User or Enterprise Benefits to the New IP

7|30|15   |   04:27   |   (1) comment


Andrew Coward discusses what the New IP means to end users or enterprise customers. He explains compelling reasons, including how every customer can get their own network, from the transformation to the New IP.
LRTV Custom TV
Network Visibility & the New IP

7|30|15   |   02:23   |   (0) comments


Mukund Srigopal provides an explanation of what network visibility is and how it is essential as service providers transition to the New IP. In addition, the importance of the network packet broker is discussed.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Infographics
Cisco's cloud and virtualization portfolio can increase business agility and innovation by building a more flexible network architecture.
Hot Topics
Verizon Hums a Driving Tune
Sarah Thomas, Editorial Operations Director, 8/26/2015
Gogo Approved to Speed Up In-Flight WiFi
Sarah Thomas, Editorial Operations Director, 8/24/2015
Could Market Volatility Hurt Tech IPOs?
Dan Jones, Mobile Editor, 8/24/2015
Sprint's Claure: '3 to 5 Years' to Turnaround
Dan Jones, Mobile Editor, 8/25/2015
Like Us on Facebook
Twitter Feed
September 22, 2015
Media Begins With “Me”
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Jeff Miller, President and CEO of ActiveVideo, talks to Light Reading founder and CEO Steve Saunders about the impact of virtualization on the TV and video distribution market.
Equinix CTO Ihab Tarazi talks to Light Reading founder and CEO Steve Saunders about data center, cloud and the impact of virtualization in the coming years.
Cats with Phones
Cats Are a Smartphone's Best Friend Click Here
Whoever said cats didn't live to please their humans?