I am always looking for examples of great marketing to include in my different courses. For the past few years, one of my favorite examples in the area of new business strategy has been Flip.
Flip is a wonderful example of a company changing the rules in an established category. When Flip entered the video camera market, the existing products were expensive, high-tech devices, and category leaders such as Sony focused on making cameras with more and more resolution, features and technology.
Pure Digital Technologies launched Flip in 2007. It was a completely different sort of camera, with low resolution and few features. But Flip was simple, cheap and easy to use. By looking at the category differently, Pure Digital created a very unique and appealing product. Flip quickly became a huge success and Cisco bought the company for $590 million in 2009.
Yesterday, however, Cisco announced that it was killing Flip.
This is astonishing. It is remarkable that Cisco would be scraping a product it paid almost $600 million to buy just two years ago. It is also remarkable that Cisco couldn’t sell the brand; if someone wanted to buy Flip I am very confident Cisco would sell it: a bit of money is better than nothing.
Did Cisco mismanage Flip? Perhaps: it is clear that the brand didn’t flourish under Cisco’s stewardship.
I suspect Flip died primarily because technology changed; Flip is now fighting against very strong competitors including Apple’s iPhone and iPad. Cisco presumably decided there was no way Flip could compete long term.
Regardless, I suppose I have to stop talking about Flip in my courses.
Or not! Looking back, it is clear that we need to give even more credit to people at Pure Digital than we thought; they created a successful new product and then shrewdly sold it at the right moment. Flip is actually an example of two things: how to innovate and then how to monetize.
I will have to update my slides, but I’ll keep talking about Flip. It remains a great example of smart, strategic marketing.
I agree that Flip is a great example of building a tight brand with a clear focus and consistent experience — I just think Pure Digital and Cisco built the brand around the wrong target. They had a great consumer insight in that consumers want to an easy way to capture and upload video content, but this benefit, I think, is strongest for a younger middle-aged consumer who struggles with technology. I’m thinking of parents with new or young children who’d like to capture and share video with ease. However, Flip targeted the youthful “youtubers” via the product design and promotion. This group already largely carries smartphone, is tech savvy, and is willing to trade-down for low-cost alternatives. So, I’ve thought all along that Flip was a miss — they invested heavily in a differentiated brand that wasn’t relevant to their target.
Elliot—I think you are correct on the targeting. Flip couldn’t ultimately win a tech-savvy group of customers. Targeting was probably an important part of the story.
Tim
Innovative by definition means new – it’s kind of shocking in retrospect that Cisco, who was a leader in networking, didn’t see the “a ha!” of offering a Flip that could wirelessly upload video to share with friends. Instead they gave it the kiss of death -each year more memory, lower price, but no new features. Apple (and others) consistently introduce new products/software and services. Most work, but some don’t (AppleTV) but they learn from them.
Interesting on several points – how to ignore your core business and focus on sexy things (Flip, Telepresence, TV product placement), forgetting that competitors and competitive fields shift very quickly in consumer electronics.
This is a very interesting article. I think this story demonstrates when a technology company stops to innovate, they face a high risk being obsolete and irrelevant. Flip has enjoyed its share of success for many years but little has changed in the past couple of years from functionality perspective. Maybe it doesn’t consider Apple as a competitor back then and somehow missed the boat to stay relevant…
Tim,
I also included it in my Kellogg global marketing course and a student team last year chose to launch it in another country for their final project. I love(d) the product and even bought 5 for presents over the last 2 years.
I think that Cisco, a B2B company, made a mistake jumping into consumer durables which requires skill sets and a consumer understanding that their managment does not have.
Phil Corse
Phil—I agree that moving into the b to c space was probably a mistake for Cisco…it is a very different type of business, with some very tough competitors.
Tim
Another interesting piece from the Flip story is the velocity at which a product can move from innovative to relatively obsolete. A three-year life span for what felt like a compelling new product is noteworthy.