In early 2009, Cisco acquired Pure Digital, maker of the ever-popular Flip video camera, for almost $600 million. The Flip devices had ushered in a new form factor, packaging HD video into a camera the size of a deck of cards.
Cisco saw a chance to put its brand behind a device whose traffic would fill the pipes of an Internet built on Cisco technology. It saw a device into which it could embed its dominant Wi-Fi technology, catering to the YouTube and Facebook generation. And it saw an opportunity to build its brand with consumers instead of remaining a faceless company behind utility infrastructure.
And then in late 2010, with hype normally reserved for a new i-something, Cisco presented us with Umi, a home telepresence system that was sexy good, though flawed from here to Cisco Way. At the time, I wrote: "There's plenty to like here. On the surface, at least, the quality and packaging of the technology are high. But there's also plenty to question, like whether Cisco can capture consumers, the debilitating effect of a closed ecosystem, and the price."
None of it worked out. Cisco's consumer foray became a major distraction for the company, which at the same time was trying to define and own a new generation of data centers behind its Unified Computing and Servers (UCS) architecture, competing with the likes of HP, Brocade, and Dell as it struggled to maintain the profit margins it once commanded. In April, Cisco abandoned its Flip business after only two years. Cisco was slow to re-invent it, or re-invent itself.
Having watched John Chambers create immense value for shareholders and customers over the years, I have little doubt that Cisco will figure out a way to recover, but clearly 2011 wasn't a banner year. --Fritz Nelson