& cplSiteName &

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
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
Flash Poll
Live Streaming Video
Charting the CSP’s Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it’s going from two industry veterans.
LRTV Custom TV
Cisco's Innovations in Cable

5|26|16   |   03:18   |   (0) comments


Marc Aldrich from Cisco discusses the latest in security, the evolution and momentum for CCAP and what the industry will be seeing next from Cisco.
LRTV Documentaries
Leading Lights 2016 Highlights

5|25|16   |   02:26   |   (1) comment


Some of the high points from this year's Leading Lights awards dinner at the Hotel Ella in Austin, Texas.
LRTV Documentaries
Light Reading Hall of Fame 2016

5|23|16   |   05:43   |   (0) comments


Find out who has been welcomed into Light Reading's Hall of Fame this year.
LRTV Custom TV
ZTE TM Forum Highlights

5|23|16   |     |   (0) comments


ZTE showcased its new ICT solutions at TM Forum in Nice.
LRTV Interviews
Gamma's MD on the Emergence of UC2

5|20|16   |     |   (0) comments


Gamma Communications Managing Director David Macfarlane believes the unified communications (UC) market has reached a tipping point.
LRTV Custom TV
The Ultimate 5-Minute Guide to Digital Customer Engagement

5|20|16   |     |   (0) comments


In this short video, you will hear all about how Digital Customer Engagement is the key to meeting customer expectations, keeping them happy, and maximizing revenue. VP Product & Marketing at Pontis, Ofer Razon, breaks down for us the five essential capabilities for successful Digital Customer Engagement. Don’t miss!
LRTV Custom TV
NFV in 2016: Part 1 – NFV Use Cases Get Real

5|19|16   |   05:57   |   (0) comments


Consensus is building around the key use cases for NFV, including managed IP services at the network edge and on customer premises, which can generate new revenues from enterprises/SMBs and consumers; Evolved Packet Core to support LTE migration; and adjacent technologies, such as TAS and IMS, to support VoLTE and next-generation charging and policy control ...
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 3

5|19|16   |     |   (0) comments


Steve Vogelsang discusses the challenges of operational transformation and how Nokia helps its customers. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Level 3: Why UC Is In Demand

5|17|16   |   04:12   |   (1) comment


Andrew Edison, Level 3's senior VP of sales, EMEA region, talks about the drivers of growth in the unified communications services market.
LRTV Custom TV
ARM's OPNFV Action

5|17|16   |     |   (0) comments


At the ARM booth at MWC 2016, Joe Kidder and Bob Monkman speak to Light Reading about OPNFV and their upcoming action.
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 2

5|16|16   |     |   (0) comments


Steve Vogelsang gives advice to service providers on how to move to NFV. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Interoute CTO on NFV's Maturity

5|13|16   |   06:46   |   (1) comment


Matt Finnie, CTO at international operator Interoute, explains how NFV has made life easier in terms of logistics and how Interoute can now enable a 'software-defined moment' for its customers.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
December 6-8, 2016,
June 16-18, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
DT: Telcos Must Escape Vendor Prison
Iain Morris, News Editor, 5/24/2016
AT&T to Start 5G 'Friendly' Trial by 2016 End
Dan Jones, Mobile Editor, 5/24/2016
Cable Is Eyeing Its Retail Options
Mari Silbey, Senior Editor, Cable/Video, 5/25/2016
AT&T's Margaret Chiosi Retires
Ray Le Maistre, Editor-in-chief, 5/25/2016
Cisco's Patel Hails 'Microculture' Successes
Iain Morris, News Editor, 5/26/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.