The news today about Cisco decided to get rid of the Flip video business came as no surprise to me. When I first heard that Cisco was purchasing Pure Digital (maker of the flash-based camera Flip) I was wondering what was the strategic logic behind it.
Not sure how much $590 million paid could be recovered. Looking back, it was not difficult to play out thescenario that HD video feature would eventually be equipped in every smart phone, point and shoot camera and even watch and even keychain. Why Cisco wanted that company? What were they planning to do with it? John Chamber’s decision to get rid of that business was a very smart one. There is nothing worth keeping and it brings up the question of whether it was a white space move or unrelated and unstrategic move?
This is where the art and science of white space mapping and analysis that can be applied to help making these decisions. People are concerned about the unknowns of white space because they lack the tools to help them to seewhat conclusions can be drawn. The two extremes are:
- No one wants to take any risks and naturally retreate to their core and reject anything that does not belong to the core. Deciding what's the core is an art and then deciding what's considered adjacencies is another art. Do we look at the core from competencies, access, brand or assets?
- They simply look at pockets of high growth markets and quickly point to it and say we need to move into that business. It is never that simple and people are not looking at strategically enough and these acquisitions are often based on false logic and most of all missing foresights. This is what strategic foresights is key when making acquisitions to compete for the future.
Case in point, was Intel’s acquisition of the Infineon Technologies AG Wireless Solutions business strategic? What foresight was the decision based upon? WLS is a leading provider of cellular platforms to top-tier makers, and forms part of Intel’s strategy to accelerate the always-connected computing platforms that span a variety of device and market segments, including laptops, cars, smart phones, tablets and smart TVs. It is move for Intel to secure their competitive position in the continuously proliferation of connected devices including device category that has yet to be invented. Complimentary assets, distinct capabilities and growth potential are all part of the logic. That makes perfect sense.
Back to Cisco, I am guessing the logic for them was to expand into media-enabled consumer lifestyle and to capture the consumer market transition from photo to video sharing and social networking. But why do we think that the video camera needs to be standing alone device? The low end of video is the most vulnerable and before we know the Flip camera is a $30 promotion gift. And the Wi-Fi enabled memory card, still not hitting critical mass, can network enabled any camera. Why a Flip?
It is easy to say Cisco can develop a next generation of consumer video gadgets? You need to first answer the question of what and why? Even combined with Linksys and other consumer products, it still lacks a strong customer value proposition for Cisco consumer business. Cisco made the right move cutting their losses. I think they should continue to focus on enterprise and there are plenty of attractive white spaces around it. It is time to redefine the core and reexamine the white space.
