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Proving that its acquisition of Flip camera maker Pure Digital in 2009 was indeed boneheaded, Cisco announced this morning that it will shut down its Flip division as part of a broader restructuring of its consumer business.

The news is a glaring reminder that Cisco, a company that has traditionally served enterprise markets, tends to find itself flat-footed when it comes to consumer devices. Its $590 million acquisition of Pure Digital made little sense at the time, and Cisco failed to do much with the Flip technology.

Flip’s downfall isn’t entirely Cisco’s fault though: Over the past few years, pocket digital video recorders have been supplanted by cellphones capable of shooting high-definition video. For most users, it’s easier to just rely on a cellphone for video recording because you didn’t need to lug around another mobile device, and the recording quality and storage capabilities of phones have steadily improved. Most point-and-shoot cameras also offer HD video recording now, and it’s something that even Apple’s latest iPod Touch can do.

Cisco says it will refocus on its home networking technology “for greater profitability and connection to the company’s core networking infrastructure as the network expands into a video platform in the home.” Basically, it’s going to stick with what it knows.

“We are making key, targeted moves as we align operations in support of our network-centric platform strategy,” Cisco CEO John Chambers said in a statement. “As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimize and expand their offerings for consumers, and help ensure the network’s ability to deliver on those offerings.”

The company will also wrap its Umi video conferencin system into its Business TelePresence line — that’s not too surprising, as the Umi was ridiculously expensive. Cisco says that it will also cut around 550 employees in the fourth quarter of 2011.


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