Video services

Cisco Banks on Video Growth

Cisco Systems Inc. (Nasdaq: CSCO) didn't acquire the Flip line of video cameras just to drive traffic to routers.

But it did see a chance to forward the goal of 12 to 17 percent revenue growth, according to Ned Hooper, the senior vice president in charge of Cisco's consumer efforts. And, while Cisco talks up big visions of making video more portable and shareable for consumers, its deeper motiviations lie in those stark numbers.

Hooper and Cisco vice president Guido Jouret were speaking on a Webcast to press and analysts Tuesday afternoon, outlining Cisco's strategy for consumer products. The topic has been popular since Cisco's acquisition of Pure Digital Technologies, makers of the Flip handheld video cameras, in March. (See Cisco's Latest Buy: Flippin' Sweet.)

The deal wasn't about turning Flip into a network device. "I don't think that's the right question. We're moving to an environment today where everything will be connected," Hooper said.

And in that environment, Cisco wants to help define the future of video delivery and viewing. Pure Digital was a good acquisition target because its team shares Cisco's belief "that video is the transformational experience and one where network connectivity creates new business opportunities," Hooper said.

Along those lines, Cisco released a new version of FlipShare software yesterday that lets users create online channels out of their videos. (See Flip Adds Video Sharing.)

Echoing what CEO John Chambers has said, Hooper and Jouret explained that it's too difficult for consumers to move a video off of whatever device it's initially stored on. Consumer devices and the network should handle issues such as which codec to apply or what screen size is being used, they said.

But what does Cisco really get out of this? A common guess has been that more video traffic will drive router demand -- which happens to be true, but Hooper insisted that Cisco's plans extend far beyond that. Video is a whole new sector of business for the company, as has been evident in recent moves like the coining of the "medianet" term and the launch of home networking products at the Consumer Electronics Show. (See Cisco's Video Transformation , Cisco Goes Content Crazy, and Testing Cisco's Media-Centric Data Center.)

And by opening up that new sector, Cisco gives itself a better shot to reach that 12 to 17 percent long-term growth, a target that Chambers still insists Cisco can reach. (See Cisco: Economic Troubles Aren't Over.)

"All of this clearly increases our [available market], and we see this consumer opportunity as a key component of how we're going to achieve our long-term growth guidance," Hooper said.

It's still not clear what Cisco is planning for the Flip cameras. But Hooper did mention that that acquisition will be the basis for "the expansion of video capability across all of our consumer platforms, with preparation in the long term to be able to deliver consumer telepresence."

Cisco has stated repeatedly that TelePresence, its high-end videoconferencing platform first targeted at businesses, will eventually get down to consumer proportions.

— Craig Matsumoto, West Coast Editor, Light Reading

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