Business VoIP

Days after upending the IT space by entering the computer server market, the world’s largest maker of networking equipment today announced that it intends to buy the San Francisco-based company that developed a cell phone-size camcorder which emerged as a bright spot last year for the struggling consumer electronics industry.

 

Officials at San Jose, California-based Cisco Systems Inc. say they’ll pay $590 million for Pure Digital Technologies Inc., creators of Flip Video products, pictured below.

 

Cisco’s (News - Alert) senior vice president of corporate development and consumer groups, Ned Hooper, said the acquisition is part of the company’s targeting the so-called “media-enabled home,” and to capture the consumer market’s migration to visual networking.

 

“Pure Digital has revolutionized the way people capture and share video with Flip Video,” Hooper said. “This acquisition will take Cisco’s consumer business to the next level as the company develops new video capabilities and drives the next generation of entertainment and communication experiences.”

 

 

When the deal is done, Cisco says, Pure Digital’s workers will join Cisco’s consumer business group, which includes Linksys (News - Alert) by Cisco home networking, audio and media-storage products. Jonathan Kaplan, chairman and chief executive officer of Pure Digital, will become general manager of the combined organization, the company says, and report to Hooper.

 

As TMC President and Group Editor-in-Chief Rich Tehrani (News - Alert) notes here in his blog this morning, Cisco’s efforts in consumer electronics haven’t been as successful as its efforts in the enterprise.

 

“But the company seems to believe if it sells enough products in the connected home, sooner or later it will become a preferred provider in the consumer setting,” Tehrani writes. “They could be right, but the problem for the industry today is the threat from Apple who will continue to own more and more of the home network and consumer electronics market.”

 

Today’s news marks the second bomb that Cisco has dropped this week.

 

On Monday, as TMCnet reported, the company essentially pit itself against a handful of long-standing partners when it unveiled a new data center architecture that includes compute, network, storage access and virtualization resources in a single rackable system.

 

Officials at the IT bellwether say their so-called “Unified Computing System” is designed to reduce IT infrastructure costs, leverage existing IT investments and allow enterprise customers to build an agile data center that they can easily extend for future growth.

 

According to Mario Mazzola, senior vice president of Cisco’s server access and virtualization business unit, the virtual machine has become the new atomic building block of the data center, creating new challenges and opportunities with the potential to transform the computing environment and deliver significant benefits.

 

“Taking advantage of this architectural shift in the data center, we developed a unique new computing model that transforms the data center into a dynamic IT environment with the power to increase productivity, improve business agility and drive the benefits of virtualization to an entirely new level,” Mazzola said.

 

Meanwhile, in acquiring Pure Digital, Cisco takes into its fold a company that’s seen a meteoric rise in the past 12 months, selling more than 2 million units of its Flip camcorders, including the Flip Mino, Flip MinoHD, Flip Ultra and Flip Video. The camcorders come with a software program that allows users to create mini-movies which are already common in popular social networking and video sites such as YouTube, Facebook (News - Alert) and MySpace.

 

Kaplan said that by joining Cisco, “We join a company that shares our passion for video and whose global scale and tremendous technology expertise we expect will enable us to quickly expand and enrich the Flip Video experience.”