NEW YORK — Cisco Systems, the world's largest maker of computer networking gear, said Tuesday it's shutting down its Flip Video camcorder business as part of a reversal of years of diversifying into consumer products.
The about-face comes after several quarters of disappointing results and challenges in its core businesses. The company said it expects its consumer business shake-up will result in the loss of 550 jobs, or less than 1 percent of its work force of about 73,000.
Cisco bought Pure Digital Technologies, the maker of the Flip Video camcorder, for $590 million in 2009.
The Flip Video quickly became a top seller because it was easy to use. A signature feature, since copied by many other manufacturers, was a USB connector that flipped out of the case, letting the user connect the camera directly to a computer. The camera also contained video-editing software.
Last year, the Flip Video was still the top-selling video camera in the United States, with 26 percent of the market, according to IDC analyst Chris Chute. But that amounted to only 2.5 million units sold. Dedicated video cameras are small potatoes compared to digital still cameras and smartphones, both of which shoot video.
That could be the reason Cisco appears to see no point in selling the business and will shut it down instead. A Cisco spokesman did not respond to a question about why the unit would be shut down. It will continue to support the sharing of Flip videos online.
Top competitors in the pocket camcorder field, which could benefit from Flip Video's demise, are Eastman Kodak and Samsung Electronics.
Cisco said it will realign its remaining consumer business to support four of its five key priorities — routers and switches, corporate communications and collaboration equipment, data-center products, and video.
That means it's retrenching on another consumer video business — home videoconferencing. In November, Cisco started selling the umi, a $599 box that turns a high-definition TV into a big videophone. But signs soon emerged that the umi wasn't doing well. It cut the price of the unit in March, along with the service fee, which went from $24.95 a month to $99 a year.
On Tuesday, Cisco said it will fold umi into its corporate videoconferencing business and stop selling the box through retailers. Instead, it will sell it through corporate channels and Internet service providers.
Cisco's Home Networking business, which makes Wi-Fi routers and has the 2003 acquisition of Linksys at its core, will be "refocused for greater profitability," but Cisco will keep selling the routers in stores.