When Cisco abruptly shuttered its Flip pocket camcorder division this week, laying off 550 employees in the process, armchair analysts attributed the pocket camcorder's demise to competition from video-capable smartphones. While it's true that smartphone video output approaches pocket camcorder quality, it's an overly simplistic examination of the market, especially considering the success rival companies have had with their pocket camcorders and Cisco's primary focus on the enterprise market.
First, a bit of back story... networking specialists Cisco acquired Flip maker Pure Digital in 2009 for $590 million. This move led to all sorts of speculation that Cisco would leverage its networking prowess in producing a connected Flip cam, that is, one that could connect to the cloud via Wi-Fi or cellular technology for instant video uploads and real-time streaming.
That never happened. While rumors indicate Cisco was set to release the FlipLive camera that did all that, the recent news squashed any chance consumers would ever see a connected Flip. Instead, in the two years Cisco owned Flip, the company released the slightly-innovative-but-ultimately-mediocre SlideHD, and a refreshed UltraHD and MinoHD.
Good Enough Flip
Ultimately, the Cisco Flips were incremental upgrades over the units Pure Digital released prior to the acquisition, featuring the same plain design, stupid-simple operation, and good-enough video quality. Compared to the competition from Kodak, Sony, and others, the Flips were clearly inferior products. In fact, Kodak snagged the number one position in the market from Flip with the Kodak PlaySport rugged pocket camcorder, which allowed for underwater shooting in up to ten feet of water. Prior to the PlaySport, Kodak also released the excellent Zi8, which shot higher-quality video than the Flip and sported an external mic jack – a still novel but completely necessary feature for anyone remotely serious about shooting decent video.
For its part, Sony never rested on its laurels in the market, and still hasn't. It released the Webby in 2009, re-branded it the 'Bloggie' in 2010, and then redesigned it as the excellent Bloggie Touch ten months later. Sony is also continuing to innovate, bringing the Bloggie 3D to market in the coming months, which shoots real 3D and will cost only $250 at launch, in addition to the dual-screen Bloggie Duo.
Flip Tech Wanted, Not Flip
There is also the point The New York Times' David Pogue made in his analysis of the situation. It was that Cisco was never really interested in entering the consumer pocket camcorder market, but instead acquired Flip purely for the video technology. Cisco is very keen on videoconferencing as part of its core business. The Flip's ultra-portable and low-cost video technology fits nicely into a desktop unit or video tablet like the Cisco Cius.
As Pogue also points out, it's way too early for smartphones to significantly dent pocket camcorder sales. Smartphone penetration in the US stands only at 35% of the population, and they don't even shoot pocket-camcorder-quality video. That's not to say that smartphones won't eventually pose a threat to pocket camcorders, and that's exactly why Sony and others are doing what Flip didn't do... innovate with new features and higher quality.
Apples and Oranges
Sony reacted to the news in blog posts that restated its commitment to market. It stated, “... we won’t play dumb on the idea of cell phone video entering the market, but the reality is right now…we believe its apples to oranges.” It later added, “We see a world right now where there’s a place to use your phone and a place to use your MP4 camera. Two different needs and use cases.”
I agree, despite armchair analysts' claims to the contrary. We are at least a few years away before smartphones invade pocket camcorder turf, and the Flip was axed not because of smartphones, but because of Cisco.