Back Flip

Chambers has the nerve to make the final cut for Flip as the company and product came right in the middle of a social media marketing initiative.

With 350,000 followers and fans, Flip has been a beloved product and brand and apparently the team working on the crowdsourcing initiative had not been in the known.

You usually aren't prepared, unless you learn to read the signs -- you can find them right in the 10ks and annual reports, depending on whether your company is private or public. And you also learn to ask the right questions when talking with the managers with P&L responsibility.

Of course, it's hard to predict if the company will push through trouble or cave in to pressure. Do judge the character of those in charge.

It was only a few short years ago that Cisco launched the human network effect campaign and was ready to turn socialist. It could have predicted how the conversation would have turned.

Another disconnect with a Board?

Shareholders still come first

It depends on which customer you are. Which is why this is a really good example that all those ROI questions are but a protracted delay on a conversation of a different nature. Organizations respond first and foremost to shareholders. It's the system. Deal with it.

Shareholders are also customers, employees, family, community, etc. these days. The business world is still catching up with that thought. And you would be surprised to learn how many businesses stay in business based upon their real model and product, which may be very different than what you think it is.

Hint: it has little to do with becoming human. So Cisco acquires a beloved brand, despite not having the experience in consumer strategy, then kills it a couple of short years later. Facing a trade-off between profit and market share, Cisco will cut 550 jobs as part of The Flip closure.

The real numbers

According to analysts, Cisco bought Flip to expand its expertise in home-video networking, a bid that never paid off. Flip posted about $325 million in revenue last year, less than 1 percent of total sales.

A slump in overall margins for the company, which was in part due to its push into consumer products and overall by pricing pressure on its corporate products, have the company refocus on its core business - routers and switches.

Market valuation and share price are the real numbers. Year-end 2010, Cisco had over US$16b Goodwill on its balance sheet, so what's US$300MM or so to write down on that? They'd rather take that than try to find a buyer for the business.

Customer conversation

It's sad, yet predictable, to see that the organization has not responded to fans and followers since the announcement was made. Will loyal customers save the Flip?

Jules, the Save the Flip site creator, lists questions and the general sentiment about the decision to axe the business that caught loyal fans offguard. Summarized and edited from the site (also emphasis mine):

• You asked product/brand fans to support your social media campaigns and online outposts, and to sign up for your email list. People did all that and bought your product. But the silence now? What happened to the relationship?

• The Flip is not just a camera, it's a revolutionary product that changed the way people produced and shared Video online. People from all over the world, from Africa to Afghanistan, from kids to their grandparents used it to share from their lives. This is an audience that money can’t buy, why not treasure it?

• The Flip has become a symbol of the (video) revolution in self-publishing. It provided the means for many people to access an affordable, easy-to-use Video camera and get their voice heard. How can this iconic communication tool be trashed in an instant?

• Why not sell The Flip? There were reports of interested buyers. If The Flip doesn't fit into Cisco's  business model, you should find a suitable buyer. You owe it to customers.

• We urge you to reconsider your position in the next few days. People's immediate concerns are what is going to happen to support for The Flip, warranties, and future upgrades and support of FlipShare?

• Many bought the latest Flip Ultra HD (3rd Gen) based on the lure of the new Flip Port added to the camera last year. Future 3rd party accesssories, like long awaited microphones, were also announced. What will happen to these accessories now overdue? Whatever the outcome, we ask you to secure the release of these products asap to fulfil your promise to your customers.

Will Cisco do a back Flip for the beloved product? I doubt it for the reasons above. It still owns all the patents and technology. What are they going to do with it? Are they going to license it out? Anybody can make the shell the thing sits in.

If the company had not been purchased, a natural evolution of the product would have been including a mike with it. That would have been a welcome addition as audio can be hard to capture on the go without it.

So they'll either license the technology out -- the patents will provide a revenue stream -- or sell the patents. This may be good news for a competitor of The Flip. As for customers, it looks like the conversation will be discussing amongst yourselves.

[I do love my Flip, too]

 

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Comments

[Jgibbard]

I was totally caught off guard by the sudden closure of Flip. Though I didn't have a Flip camera myself, I'd used one and recommended it to countless customers and prospects. The Flip was indeed iconic and representative of the shift towards a world of participation.

While I can appreciate the obligation to put shareholders first, in cases like this, I find myself thinking that "this is what's wrong with business," particularly public companies. I hope for the loyal following of Flip cameras that Cisco does a backflip.

[Craig McGill]

The real question is this: will people boycott other Cisco products as a protest at this? If not, it's no loss to the company and it shows that people ultimately don't care enough so why should the company bother with 'the conversation'?

I like what Flip brought to the market. I use Kodak's Zi8 myself - better piece of kit IMO - but Flip was the gamechanger (and it's tragic to see 550 jobs go).

[Valeria Maltoni]

regular consumers won't challenge the router and switch business. Thought I made the point in the post... and the company doesn't bother because it's not invested in it. Period. It's one thing to talk about being "social", another to demonstrate it by living it. Last time I checked, it looked like the Zi8 had also been discontinued in favor of another model. And Kodak's business replies on patents, not social ;-)

[Valeria Maltoni]

because they can. The whole system is built that way. The more realistic hope is that someone who cares and is in that business, licenses the technology.