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Case Application: Flip Flop: Part 2 our years. That's all it took for the Flip video camera, the most popular video camera in the United States, to go from hot start-up to obsolete. But even in the life cycle of tech products where things happen fast, this seemed to be in the blink of an cye-unusually fast, as one analyst said, especially for a "hot" product. What happened? The Flip camera broke new ground when it was introduced. Customers loved that it was pocketable, inexpensive, and easy to use. Flip's name came from the arm that flips out of the camera body and lets the user connect it directly to a computer. The camera also had video-editing software that opened when it was connected to the computer. Although the actual video camera seemed tiny, it recorded remarkably good footage for a camera of its size. In addition, unlike other video cameras, the Flip could be held comfortably in front of you so you didn't paying for product placement in shows soch as 24. Even was exactly what the founders envisioned_a practical pocket- Cisco's CEO, John Chambers (who owned eight Flips), shot sired, inexpensive, and easy-to-use video camera. videos on a Flip and constantly had it in view during television When Cisco Systems decided to acquire Flip, one of the interviews. It even had Sean "Diddy" Combs design a custom hottest consumer products to hit store shelves in a while, many Fip camera. Hip sales duning fiscal 2010 were $317 million. However, it must not have been enough. Cisco had suffered "odd fit" for the company that's best known for its business several quarters of disappointing financial results and chalenterprise networking services. The Flip camera was the finst lenges in its core businesses. Analysts said that the company true consumer product under the Cisco umbrella. In its had been trying to do too many different things and losing its announcement, Cisco said that the acquisition was a key to its focus on what made it great. In retrospect, it was easy to see strategy to expand momentum in the media-enabled home. that major strategic changes were looming. There was no doubt that Cisco was serious about the company's desire to expand its market from technical components into true was leaving Cisco to pursue "ocher career opportunities" "Then, consumer electronics. And there was another variable at work CEO Chambers said in an interview that "revenue from here, as well. The acquisition of Pure Digital Technologies (the consumer products over the holiday seavon fell short of the actual company behind the Hip camera) was another sign that company's hopes. "Then came the annoencement in mid-Apnil Cisco was making a statement by aggressively pushing into 2011 that Cisco was restructuring and shutting down its new markets when many of its competitors were floundening Flip videocameta unit. Chambers said, We are making key. during the economic downtum. Pure Digital became a part of Cisco's Consumer network-centric platform stratezy." In addition, analysts Business Group, which also included Linksys home network- pointed to the rapid innovation of smartphones as one ing, audio, and media-storage products. When Cisco acquired of the most disnuptive trends ever seen. As phones with built-in Pure Digital it also named Jonathan Kaplan, Pure Digital's carneras and editing apps hit the marl CEO, as Cisco's senior vice president and general manager in charge of consumer products. Kaplan was to help set Cisco's strategy in this area. And Cisco did what it thought was neces- DISCUSSION QUESTIONS sary to compete in the consumer market using Flip as a key 1. 'I don't think there's an analyst on the planet who thought focus. It spent heavily on consumer branding, hiring celebrities that Flip was a good acquisition for Cisca." Why do you such as Ellen Page to star in its television commercials and think these analysts felt that way