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Cisco to Acquire Flip Maker Pure Digital for $590M

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Networking giant Cisco (s CSCO) says today it will purchase Pure Digital, the makers of the popular Flip line of portable video cameras for $590 million in stock. Cisco will also pay out $15 million in retention incentives for Pure employees who stay on with the new company.

More than 2 million Flip video cameras have been sold in the U.S. to date, and the move will expand Cisco’s consumer market presence with what is essentially, a high-end toy. But look for Cisco to transform this toy into something much bigger.

Cisco sees video as the main driver of network bandwidth consumption. In its recent Visual Networking Index, the company said that traffic associated with user-generated video content will triple from 2008 to 2012. All this video being created and uploaded to places like YouTube will, the company hopes, drive the purchase of Cisco networking gear.

Cisco will look to marry Pure Digital’s low-cost video capture devices with its Linksys’ networking devices, using Network Magic as the software glue to enable it all. Pure’s technology could also be incorporated into Cisco’s Telepresence, which enables video meetings or, potentially, even video calls to grandma via the television.

Pure Digital had raised $68 million over the course of its seven-year history.

7 Responses to “Cisco to Acquire Flip Maker Pure Digital for $590M”

  1. This deals reminds me of Skype/Ebay deal. Chambers likely does not understand the thin margins and lack of loyalty in the consumer space. I cannot imagine that the software used by Pure is too complicated to be replicated by a 16 year old Bangalore resident is 3 days.

    Does Chambers not anticipate that most phones will have this feature? Perhaps he is thinking of a Pure phone. But, he would be better off buying PALM.