Flip handheld video camera gets the ax

BOSTON/NEW YORK Tue Apr 12, 2011 8:25pm EDT

BOSTON/NEW YORK (Reuters) - The popular Flip video camera -- the top-selling camcorder in the United States last year -- is getting the ax as part of a revamp at parent company Cisco Systems, CEO John Chambers said on Tuesday.

The move to kill a gadget that won rave reviews for jump-starting low-cost handheld video comes less than a week after Chambers said he had to make "tough decisions" about cutting spending on some product areas.

Cisco bought Flip in 2009 for $590 million in an acquisition spree to build a stronger consumer business. The surprise decision to shut down Flip rather than sell it underscores pressure on Chambers to whittle down Cisco's money-losing consumer division.

Cisco spokeswoman Karen Tillman did not say why the company decided to kill the Flip business rather than sell it.

Last year Cisco sold 23 percent of all camcorders in the United States, ahead of Sony and Eastman Kodak, according to market research firm NPD Group. Those figures exclude sales by Wal-Mart and some club stores.

Cisco said it would clean out its Flip phone inventory before ending the product line. It is almost unheard of for a manufacturer to kill a top selling product in its category.

Social networking site Twitter was abuzz with tweets about the news, and "RIP Flip" was one of the day's most discussed topics. "Too bad. I still love my Flip!" tweeted one user.

Flip has recently lost some of its cachet, primarily because mobile phones makers now offer devices with similar functions incorporated into their handsets. It has also faced strong competition from other handheld camcorders, including Kodak's line of PlaySport devices.

Cisco plans to cut 550 of its 73,000 jobs. Chambers has previously said the company would focus on five areas: routing, switching and services; collaboration; data center virtualization; architectures; and video.

(Additional reporting by Jennifer Saba, Bill Rigby and Noel Randewich; Editing by Derek Caney and Richard Chang)

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