How many brand name HD camcorders do you know of? How many mobile phones will be out there with HD next year?

this is a rediculous price in a market where Cisco has struggeld to compete and sell. nyone remember the “kiss” acquisition? Another consumer white elephant company.

I’ll take panasonic, sony, sanyo over Cisco any day! Or better still Samsung or iPhone.

This company has only sold 2 million units! Nortel is up for sale at a cheaper price! Madness…. the shareholders should be asking JC just what on earth was he thinking.

This is an expensive white elephant. When will Cisco look outside of the US and understand what is going on on a global scale? There are many many different types of HD video cameras available today. So this can plug directly into a PC or USB port?- big deal.

Do you think that cell phones won’t have that capability next year? The Samsung Omnia provides HD 720p video recording capability and you can upload direct to youtube without going through a PC using wifi.

What about the latest iPhone with video?

Cisco concentrate on “changing the way we live, work, and learn” -leave out the “play” part, we just cannot compete agianst mobile phone manufacturers, sony, sanyo, panasonic, etc.

This acquistion was all down to J. Chambers’ evangelical fixation on video. We have skype- we don’t need telepresence at home. We have mobile phones- we don’t need to carry yet another device around with us. We all have PCs at home- don’t think we will all rush out to get a Scientific Atlanda box under our TVs to upload flip videos to some obscure Cisco social networking site.

Reseach your customers, understand the market, understand the competition and stop wasting your share-holders money!

I’d like to add a lesser visited point. Cisco believes in a deep HR bench. It has that plenty in its core routing and switching and related Advanced technology and in its Broadcast area. It has a much more fragile bench on the consumer side. In fact one can cautiously argue its their biggest potential mis step in the making especially considering the Billions Cisco will surely spend on consumer side of the business in the coming months and years. This deal brings on people who Cisco gets as leaders and who strengthen that bench. I do believe the money is well spent if they can keep the team and integrate it within their broader consumer aspirations.

A few years from now, as selling routers and other low-margin network equipments becomes a commodity, I trust most profits will come from this new business division. In summary, I think this was a fair price for Cisco to pay to get in this business. Companies that are already established in this industry segment wouldn’t (and probably didn’t) accept to pay this price.

Currently two great CE brands, Sony and Panasonic are trading at 1/13 and 1/11 of the multiple that Cisco paid for Pure Digital

Mkcap Sales Multiple

Sony 20,59 89,6 0,23
Panasonic 24,25 91,6 0,26
Pure Digital 590 200 2,95

Agree with your comments on the tech capabilities and quality levels of a Canon camera especially when you can shoot a 720p, compared to a flip.

However, i dont think cisco would have bought the Flip to just get an entry into the consumer electronics arena and compete agains the canon’s of the world, right? I have seen my friends use a Flip which is really a simple, awesome product with high utility and clean software solutions that even kids or soccer mom’s as you said, can use it with ease.

So, could the Flip be a buy of not just a great user friendly product but also of a strong technology / software component that can be embedded into Cisco’s home video products like set-top boxes, consumer telepresence capabilities etc? If that’s the case, I dont think a 2.5-3x revenue might be an overpay, especially if you look at it from the perspective of not just a nice consumer product driving video but also a technology solution play that can be the gateway for future network video solutions. (which probably drives more top / bottom line $ for cisco).

Again, as always, only time will tell for the not so obvious deals…but I think this might be an interesting one.

They can have the smartest marketing guys in the room, but if their niche was founded on “non proprietary” technology as you point out above, then Cisco will need to complement that marketing genius with good R&D to make the Flip a viable future HD competitor when the low end point and shoot cameras offer 720p.

Think about the chaos, if Apple included 720 or 1080 in the next 1 or 2 generations of the iPhone or Touch.

Flip is a great niche device, but the market and perceptions move swift.