When Cisco announced its end-to-end video strategy back in 2009 it seemed pretty brilliant. Well, logical at least. Back then they were going to own video--from creation, through networks, and into the home. They went on a buying tear, and snapped up brands like Linkysys and FlipCam.
By the numbers it all made sense. Video was the largest consumer of web bandwidth. And more video meant the we would continue its hungry expansion of both servers and switches. Cisco was in the sweet spot--and so furthering the demand would only help Cisco profit.
Now, just three years later, the plan doesn't seem to be working.
Just two years after Cisco bought Pure Digital the maker of the popular Flip Cam, for 560 million dollars--today it announced plans to close down the business.
Said Cisco today, it will "close down its Flip business and support current FlipShare customers and partners with a transition plan."
Wow. Big winner--APPLE--who now will effectively own the portable video recorder business.
What happened, did John Chambers pick the wrong acquisitions? Did the demand for end-to-end video not materialize? Or, is the one problem facing all web companies is the web itself as it changes character?
You see, the web is no longer about scale. Been there, done that. Now the web is about people. And people are--well, err.... complex.
I know this because I made my first call to Cisco customer support after I had some trouble getting video from my Flip cam into Apple's Final Cut Pro software. My customer service call a few months back landed in an offshore call center, where--after about 10 minutes of reading through a branch and tree support script said simply: "Call Apple, let them figure it out."
And I know I'm not alone. Home networking is complex, and no-one's collection of computers, wifi, printers, and home media servers are the same. Which means whomever touches the consumer is going to get the support calls--and the blame--for a lot of complexity that may not be their fault.
From the day I saw the Cisco logo on a VOIP phone during an episode of Fox's 24--I wondered if becoming a consumer brand was the right idea for the networking giant. Now it appears the answer is a resounding 'no."
Chambers is now admitting defeat, saying in an April 4th memo that he would make 'targeted moves' in just a few weeks to sharpen the company's focus. That's code for getting out of the consumer business.
Sean Conner, an analyst at Nuveen Asset Management in Minneapolis said it this way: "Cisco has realized that's a crappy business," said Conner. "There are no synergies with the rest of their business. A lot of these businesses they put together are hurting the overall puzzle."
Crappy business indeed. The web's last mile to the living room is messy one. Fraught with technophobes, newbies, geeks, and grandmothers--all trying to figure out how to connect their flat screen TV to their wifi network. That is the place where tech companies find the rubber hits the road. Often, in ways that aren't too pleasant.