For a company whose roots are routers and switches, Cisco is orchestrating a fascinating strategic transformation into a consumer-focused company. The latest foray is the purchase of Pure Digital Technologies, which makes the popular Flip digital cameras, for $590-million.
The deal enhances a consumer-focused portfolio that also includes Linksys, which Cisco acquired for $500-million in 2003, and Scientific-Atlanta, acquired for $6.9-billion in 2005.
That said, Pure Digital, which raised $80-million of venture capital, is a different consumer beast for Cisco given it’s potentially a mainstream product that anybody and everybody can use. Easy to use and selling for less than $300, the Flip has taken the digital camera market by storm, capturing 20% of the market over the past 18 months.
A New York Times story last Sunday included an interesting section about Flip and how it was eventually financed by Sequoia:
When Jonathan Kaplan pitched his initial business plan for the Flip video camera, Mr. Moritz branded it “terrible.” Mr. Kaplan, who had been hoping for something like “promising,” or “has potential,” came away jolted.
But every now and then, Mr. Moritz meets an entrepreneur who dazzles him. He saw that with the founders of Yahoo and Google, which he financed on behalf of Sequoia. When that happens, the taunts disappear. Mr. Moritz throws his energy into persuading those entrepreneurs to let Sequoia invest and help them build their business.
Ultimately, Mr. Moritz decided that Mr. Kaplan did have the right stuff with his Flip camera. The key was to stop positioning the Flip purely as another electronic device, and to recast it as something simpler and more revolutionary: a source of easy, on-the-go video that would brighten people’s lives. Apple would have been proud.
Here’s a complete list of Cisco’s acquisition activity over the past 16 years.
For more on the acquisition of Pure Digital, check out VentureBeat.
Technorati Tags: cisco, flip, pure digital
2 Comments
Cisco hasn’t really done much with some of these acquisitions. You would think that their purchase of Scientific Atlanta gives them an entry into the living room. But they haven’t really released any products that build on their networking strength.
Why not integrate an “AppleTV” or Media Extender type of functionality into a cable set top box? It shouldn’t be very hard to do. Linksys has made media extenders for years and they have only been marginally successful.
It seems like they are pretty splintered in terms of the types of companies they have purchased. I wonder if this is purely a monetary decision to diversify revenue streams or whether they actually see a way to bring about some sort of synergy.