Just days after CEO John Chambers promised Cisco employees that Cisco would become more disciplined and focused on the company’s core businesses of routing and switching, data centers, video and collaboration, Cisco began jettisoning its consumer businesses.
Last week Cisco published a memo from Chambers, in which the CEO promised that Cisco would make some radical changes to get back to its core networking roots. Today the company steamed ahead with those promises, announcing that it was pulling back from many consumer-focused businesses, including its HD video camera, the Flip. Just two year ago Cisco bought Flip camera manufacturer Pure Digital Technologies for $600 million. The move was part of a broader initiative by Cisco to expand its consumer business, but the company also claimed that the Flip had value as an enterprise tool, too.
The death of the Flip is part of first round of restructuring at Cisco, wherein the company is pulling back from its direct approach to consumer sales. Chambers announced to Wall Street today that the company will continue to serve consumers, but only indirectly through its enterprise business. In other words, it will help its enterprise and service provider customers sell products and services to consumers. This move includes 550 layoffs. The company will also refocus its consumer-oriented Home Networking division away from Linksys routers and more toward supporting video. We’ll see how that plays out.
Network engineers frustrated by Cisco’s perceived lack of focus have enjoyed dinging Cisco over the Flip acquisition as a market adjacency move that just didn’t make sense. Well, they won’t have the Flip to kick around anymore. But there’s always the Cius!