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UPDATED: As expected, Cisco today said it would buy Pure Digital, the maker of the Flip handheld video camera, for $590 million in stock. The deal will move Cisco deeper in the consumer market and give it control of a device that produces video, which it […]

mino_250x200_031809UPDATED: As expected, Cisco today said it would buy Pure Digital, the maker of the Flip handheld video camera, for $590 million in stock. The deal will move Cisco deeper in the consumer market and give it control of a device that produces video, which it hopes will drive the sale of its Internet routing and switching equipment. Pure Digital has raised $68 million in its seven-year history.

Cisco has recently announced products that will control video delivery from the content provider all the way down to the home consumer. With Pure Digital it can control the content flowing the other way — from the home to content aggregation sites like YouTube or personalized channels offered by cable and telco TV providers. More details coming soon. Update:

It’s easy to draw a line between the Flip camcorder and bandwidth consuming video that Cisco hopes to encourage in order to sell more networking gear. However, there are other factors at play. The Pure Digital acquisition brings Cisco deeper into the consumer home, a journey Cisco began with its acquisition of Linksys and its home routers, and continued with its acquisitions of set-top box maker Scientific Atlanta and entertainment networking company KISS in 2005.

If Cisco can integrate or transfer the dead-simple Flip software and camcorder into its Scientific Atlanta boxes, and tie the Flip camcorder to its Linksys router, it can offer PC-free telepresence to consumers. This combines Cisco’s hope of wresting control of the digital home from the PC and putting it in the network with its love of video conferencing.

Telepresence, even more than the 2 million Flip cameras out there shooting short videos, would drive the amount of video content on networks sky high. Cisco estimates that a good HD telepresence experience requires speeds of 24 Mbps and requires quality of service guarantees — both of which Cisco equipment could help ensure. Cisco has already indicated its plans to add $20 billion to its bottom line with a focus on video, and it has launched products around the what it calls the “medianet,” to deliver video from the content provider to the consumer. Driving content in the other direction — from the user back up to a content provider — also makes sense, and the Flip cameras offer Cisco control of the consumer video-producing endpoint.

Ned Hooper, senior VP of corporate development and consumer group, agrees that the purchase can be tied to telepresence, but he stressed that this buy signified Cisco’s ongoing transformation from a backend infrastructure provider to a company known for making the consumer device experience easier. He emphasized that the combination of the network and Flip cameras could allow a person’s video content to be viewed anywhere.

“Historically content is locked to a device, and is not open to move around,” Hooper said. This deal helps change that paradigm for video, in the same way Cisco is trying to do with music in its latest Linksys music router, announced earlier this year.

To help make moving content around the home and to the web easier, Cisco purchased Pure Networks last year for its software that helps network devices easily and is pushing the HNAP home networking protocol . Hooper said Cisco would integrate HNAP into the Flip camera and would add features to make it easy to operate the Flip on a network based on Cisco gear. Think about how Apple gear all works well together as an example of such integration.  However, Hooper stressed that HNAP was open for anyone to license, meaning Cisco isn’t pursuing a closed system.

So, while this takes Cisco into a new market and forces it to compete with consumer electronics makers like Sony, Cisco will likely tie the Flip camcorders back into the network in a way that drives both consumer-oriented Cisco purchases and the need for advanced Cisco gear on the carrier side.

  1. Cisco has a history of assimilating good companies with great products. While I have no insight into the greatness or lack thereof of Pure Digital as a company, I can attest that the Flip Mino HD on my desk is so cool that I bought a couple of them for family Christmas gifts. No cables to lose, no media to futz with, low enough button count to make skinny guys in black turtlenecks happy – yeah, killer product and (now) widely copied and emulated. Advanced tech often seems that way, but more advanced tech starts to become simple and that is where they are with the Mino.

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  2. Cisco probably has paid 5x times for this deal for flip cameras. The deal should be around 100 million only. Not a good use of Shareholder’s money.

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  3. Cisco should buy TiVo to add their IP to the scientific atlanta boxes.

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  4. Two comments. One is that while in the abstract, I like this deal if Cisco is serious about growing its consumer business, I still can not figure out if their strategy is about buying a bunch of disparate chicken parts or instead, about assembling a living, breathing chicken (i.e., more than the sum of the parts).

    Two is that my litmus test for products like these are if my kids take to it naturally (e.g., my three year old is addicted to my iPod touch).

    Along these lines, I bought my six year old a Flip Mino, and he took to it like a fish to water. Software works great, brain dead simple and quality is in the “good enough” bucket.

    Btw, totally different angle on Flip Video, but check out my post:

    Flip Video News – Crowd Sourcing meets CNN. (http://bit.ly/foo0)

    Leverages the legions of (Robert) Scobles out there.

    Cheers,

    Mark

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  5. While I own two of their products, the idea that this company has a 5 plus year trajectory that merits a $590MM valuation is just crazy. They are effectively a one hit wonder. There is no iTunes like play behind their device that makes switching to the next fastest gunslinger in town painful. No switching cost means this is a WAY overpriced acquisition by Cisco.

    ‘Nuff said

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  6. Makes you wonder why Cisco didn’t make an offer for Skype at that price point for a one product company.

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  7. [...] 2009 | 3:00 PM PT | 0 comments Stacey and Chris today have been following Cisco Systems’ acquisition of Flip Digital, a maker of affordable camcorders. At $590 million, I wonder if they paid too much — not that Flip management and venture [...]

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  8. @iDavid
    Because Skype had an offer for about 100 Gajillion from eBay

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  9. Probably Cisco is planning to build something like Youtube/ itune library in the Cloud and they have this gizmo to attract the consumers.

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  10. Wow, that’s a lot.

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  11. [...] I came across HNAP while reading gigaom article why cisco is buying pure digital for $590M. [...]

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  12. [...] 우리 그룹에 속하게 되었다. 왜 이 회사를 인수 했는지에 대한 분석기사는 여기에서보시길…2009-03-26 [...]

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  13. [...] Pure Digital is the maker of the Flip video camera TechCrunch VentureBeat Gigaom [...]

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  14. [...] company that makes those Flip cameras just got bought by Cisco for almost $600 million dollars – because everyone loves the [...]

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  15. [...] company that makes those Flip cameras just got bought by Cisco for almost $600 million dollars – because everyone loves the [...]

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  16. [...] it shelled out $120 million to acquire home-networking company Pure Networks, and most recently it acquired Pure Digital, maker of the Flip digital video cameras. Through the smart-grid partnership, Cisco may be able to [...]

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  17. [...] drivers for the network equipment company — video and collaboration. During its third quarter, Cisco said it would buy Pure Digital, the maker of the Flip hand held camcorder, as part of its strategy to provide a means for people [...]

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  18. [...] from his plug for the Flip camera, who’s maker Cisco recently agreed to purchase, Chamber’s statements probably ring true for anyone who works for a company that [...]

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  19. [...] such as mobile phones that can capture video and personal camcorders such as the Flip, whose parent company was recently purchased by Cisco. Once that video is captured, people are inclined to share it via the [...]

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  20. [...] video and personal camcorders such as the Flip, whose parent company was recently purchased by Cisco. Once that video is captured, people are inclined to share it via the [...]

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  21. [...] a move to further penetrate the consumer market, Cisco recently purchased Pure Digital Technologies, maker of the Flip Video camcorders. In the meantime, it’s seen good growth in its Linksys [...]

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  22. [...] this year, networking giant Cisco decided the shoot-and-share category was pretty important when it paid $590 million for Pure Digital, the maker of the Flip camera, the most popular product line in its [...]

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  23. [...] CEO John Chambers shouting it from the rooftops (or perhaps quacking it on the Flip cameras, whose maker Cisco purchased earlier this year), and this deal will extend Cisco deeper into the [...]

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  24. [...] broadband services. Video is also boosting upstream data, which is why Cisco is so pumped about its purchase of the Flip camera maker Pure Digital. (More demand for bandwidth on the upload and download side means Cisco can sell more [...]

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  25. [...] First VC backed acquisition (above $500M) – Pure Digital acquired by Cisco for $590M – http://gigaom.com/2009/03/19/cisco-to-buy-pure-digital-for-590m/ [...]

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  26. [...] First VC backed acquisition (above $500M) – Pure Digital acquired by Cisco for $590M. [...]

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  27. [...] Pure Digital is the maker of the Flip video camera TechCrunch VentureBeat Gigaom [...]

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  28. [...] notably absent was any kind of network connectivity. Cisco promised to bring networking to the camera when it acquired Flip maker Pure Digital for $590 million in March of 2009, but to date, Flip users [...]

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  29. [...] notably absent was any kind of network connectivity. Cisco promised to bring networking to the camera when it acquired Flip maker Pure Digital for $590 million in March of 2009, but to date, Flip users [...]

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