By Harry McCracken | Tuesday, April 12, 2011 at 8:43 am
Wow. Networking kingpin Cisco, which had been making a major push into the home in recent years, has announced that it’s dramatically scaling back its consumer efforts. It’s shutting down its Flip camcorder group altogether, shifting the emphasis of its ūmi TV telepresence system (announced just six months ago) from the living room to business use, and refocusing its home networking business “for greater profitability and connection to the company’s core networking infrastructure as the network expands into a video platform in the home.” (I assume that means that it’ll concentrate its Linksys line on bread-and-butter products such as routers, rather than the media streamers and other consumer-electronics gear it’s sometimes experimented with.)
The restructuring will result in the elimination of 550 jobs. And it all seems to be sudden–or at least the company was briefing journalists just a couple of weeks ago on new Flips that it planned to introduce.
At first blush, it’s surprising to see Cisco retreat from an effort which it had spent hundreds of millions of dollars pursuing. Then again, when it bought Flip maker Pure Digital for $590 million two years ago, almost everyone who analyzed the deal wondered why it was spending so much on a product category that was even then turning into a smartphone feature. And while ūmi was cool, everyone I know who had an opinion on it thought it was too expensive–and it didn’t get that much cheaper even after a recent price cut. (Side note: It’s probably a bad idea to give your product a name that a typical American may not be able to figure out how to pronounce or type.)
The one thing tying together the news about Flip and ūmi is lousy timing. With Flip, I was willing to believe that the acquisition might be crazy like a fox–but no, we now know that Cisco spent a bundle of money to enter a market that was about to go away. Flip was once a very cool, very useful product, but if there was a secret plan to keep it relevant, the company never came close to executing it.
ūmi has the opposite problem: it’s way early into a business that doesn’t quite exist yet, and six months simply wasn’t anywhere near enough time to judge its success. I do think that HD Webcams for the living room are going to catch on big time, though, whether or not Cisco is in the game.
Lesson? You can be one of the most successful makers of enterprise technology products the world has ever known, but that doesn’t mean your instincts will carry over to the consumer market. They’re really different, and few companies have ever been successful in both.