Cisco acquires Flip camera maker, analysts unimpressed

23.03.2009
On Thursday, network equipment megalith Cisco Systems announced the pending acquisition of Pure Digital, makers of the popular whose success is due to its one-button simplicity and built-in video management software for both PC and Mac. (See gadget gury David Pogue's for an entertaining explanation of the Flip's appeal. A new model, the , shoots HD video.)

Cisco watchers are largely unimpressed with the deal. In short, analysts and writers who cover Cisco consider the Flip's market of 2 million units too small for Cisco to bother with, and Pure Digital's selling price of US$590 million too small a return for investors Benchmark Capital and Sequoia Capital.

Gartner analyst :

This leaves me totally puzzled. $590 million is loose change for Cisco. But why spend even loose change on a brand no-one has heard of outside the US and which has sold about 2 million units in its entire history. Last year the mobile industry shipped well over 800 million handsets with cameras, the latest models like the Samsung Omnia can already shoot HD video which is on the cusp of mainstream mobile adoption. The chips and camera modules on mid to high-end devices will all head to HD over the next couple of years. So products like Flip are going to be buried under an avalanche of HD enabled handsets. I can understand Flip wanting to sell out before the tsunami arrives but why would Cisco buy?

Network World columnist :

A spectacularly successful cash out for Pure Digital's venture capital investor - of Sequoia Capital (keep in mind that Moritz and Sequoia were also the original of Cisco), [but] not be a wise acquisition for Cisco.