Cisco won’t have any credibility now when it tries to create FUD about its future start-up competitors (for example, a favorite Cisco FUD tactic has always been to state, “this start-up Cisco competitor might not be around in 2-years”).

Sincerely,

Brad Reese

For example, employees at a company sold to Cisco are now that much less likely to stay, knowing that Cisco could just shoot them without warning or even attempting to keep their unit viable.

As for Flip’s margins, One of Cisco’s great strengths has been its willingness to be in businesses with very diverse margins. They were getting 80%+ gross margins (on hardware!) for some of their big iron early on, yet they bought and expanded Linksys on margins sometimes less than half that. A rare and impressive feat, even if they never seemed to achieve the potential synergies between Linksys and their ‘real’ networking business.

I cannot disagree either about them wanting to make Wall St. happy, I mainly meant that perhaps even if that were their main goal, it’s their right to pursue it.

Personally, I don’t see why not just spin off or sell off, unless there are IP interests they’d like to hang on to at the coat of this product. Though for me it would be a hard sell between the Flip and the iPod touch, as the iPod endures, and is much more well-rounded for everyday use, I’m sure the Flip could be a thin enough operation to support that business on its own.

Legally, Cisco is in the right. From an ethical perspective they’re not necessarily in the wrong either, but it’s a good example of inefficiency and lack of vision. I think that’s what they’re attempting to resolve with this in a heavy-handed way. It happens outside of the technology field all the time…