Cisco Snags Flip Video Camera Maker for $590M

Pure Digital Technologies' Flip Video device
Pure Digital Technologies’ Flip MinoHD
Source: Cisco

Cisco is continuing to move aggressively into the consumer space by acquiring Pure Digital Technologies — maker of the popular Flip Video cameras — in an all-stock deal valued at $590 million.

The deal marks the latest sign by Cisco (NASDAQ: CSCO) that it’s still placing a high priority on gaining traction in the consumer space, an area where the world’s largest enterprise networking company has vowed to increase its focus — even as it’s making big waves in its core market.

Most recently, Cisco unveiled its new Unified Computing System initiative, aimed at a greater role in the datacenter.

Cisco’s acquisition of Pure Digital, however, is all about the consumer side of the business. Once the deal is finalized — it’s expected to close in Cisco’s fourth fiscal quarter, which ends January 2010 — the company will be able to offer consumer electronics gear for home-based networking, music delivery, and now, video.

As the maker of the palm-sized Flip Video cameras, which record short video clips, Pure Digital has earned a reputation as a fast-rising player in the consumer electronics business.

The firm claims that is has sold over two million units to date. A chief reason for success of the Flip Video is that the device includes the Flip-Share feature, designed to enable users to easily upload their videos to video-sharing sites like Google’s YouTube.

While Cisco is well known in the enterprise space for its networking gear, it has been active in the consumer space since at least 2003, when it acquired home networking vendor Linksys for $500 million.

Cisco’s CEO John Chambers, in a press conference earlier this year, stated that Cisco wasn’t going to be quiet about its efforts in the consumer business anymore and would be making aggressive moves in the space.

In the meantime, Cisco plans to fold Pure Digital into its Consumer Business Group under the leadership of Ned Hooper, senior vice president of Cisco’s Corporate Development and Consumer Groups, it said. Jonathan Kaplan, chairman and CEO of Pure Digital, is set to become the general manager of the Consumer Business Group and will report to Hooper.

“The acquisition of Pure Digital is key to Cisco’s strategy to expand our momentum in the media-enabled home and to capture the consumer market transition to visual networking,” Hooper said in a statement. “This acquisition will take Cisco’s consumer business to the next level as the company develops new video capabilities and drives the next generation of entertainment and communication experiences.”

Hooper helped Cisco to make a big splash at this year’s Consumer Electronics Show (CES), where Cisco signaled new efforts ahead to capitalize on consumer trends.

Chief among those is a private-label social networking platform that it launched at CES, aimed at jumping on the white-hot social networking trend. At CES it also showed off new home networking efforts with the Home Network Administration Protocol (HNAP).

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