Cisco's shutting down of their Flip business after only two years says not just a great deal about Cisco but about consumer markets as a whole. Primarily that they are very hard to succeed in and should be entered only with adequate strategies. Cisco had primarily acquired Flip and the Pure Digital team in order to gain a jump start to their consumer business strategy.
This included not only the Pure Digital team which started and successfully built the Flip business but also the retail and channel relationship's Pure Digital had acquired. There may have been some technology aspirations with Cisco's networking efforts but the consumer expertise Flip brought to Cisco was the real value.
That being said the shutting down of the Flip business by Cisco shows how difficult it is to succeed in consumer markets. Especially when consumers aren't your core business. Cisco has made a comfortable living as a solutions provider for networking infrastructure. How you orient and design your business to go after certain verticals is no trivial thing and Cisco was built to sell to big business not to consumers.
The move also shows the declining market for stand alone video camera's. In a world where technology is being integrated at a rapid level into nearly everything we touch stand alone devices are falling by the way side. Could this be a sign for E-Readers?
One other element factoring into the decision is what several other analysts have speculated around the desire for Cisco to begin a renewed focus on their core markets. Cisco has seen their core business threatened by HP in particular. By returning resources back to the core business Cisco can begin to ward of threats with a renewed focus and vigor.
We have seen time and time again in this industry how hard it is to be successful selling to both enterprises and consumers. The tried and true strategy continues to be: Focus on a customer base and build your business to cater to their needs.