Cisco buys Flip Video maker for $590m

By Marguerite Reardon on 20 March 2009, 11:07am

Cisco, the world's largest maker of switches and routers that power the Internet, has taken another step towards becoming a major player in the consumer electronics market. On Thursday the company announced it has acquired Pure Digital Technologies, the maker of the popular Flip Video camcorders.

Cisco will pay about $590m in stock for the company and will also provide about $15m in 'retention-based equity' as incentives to Pure Digital employees, the company said in a statement.

Pure Digital started selling its consumer-friendly mini camcorder in May 2007. The device, which is a little bigger than a deck of cards and has a built-in USB connection, was designed to provide an easy and simple way to take video and upload it to the Internet, especially to popular sharing sites such as YouTube and MySpace. Pure Digital says it has sold more than 2 million total Flip video units since the product first went on sale.

Cisco has been preparing for a major assault on the consumer electronics market for several years now. In 2005 it spent $500m to acquire the home router company Linksys. It also bought Scientific Atlanta in 2005 and has been selling the company's set-top boxes via its relationships with US cable operators. Earlier this year, Cisco turned the consumer strategy up a notch with the announcement of a new Linksys home audio product and a media centre for storing and organising digital media in the home.