Cisco Systems, long a provider of network hardware and software, is moving deeper into the consumer market with the acquisition of Pure Digital Technologies, maker of the Flip Video cameras.
Cisco is finally “putting its money where its mouth is” after using Pure Digital products to make videos for its YouTube site, according to Senior Manager of Global Operations John Earnhardt.
The San Jose, Calif.-based Cisco said Thursday it will pay about $590 million in stock for Pure Digital. Cisco also will throw in up to $15 million in retention-based equity incentives for continuing employees.
Acquiring the privately held San Francisco, Calif. company is Cisco’s first move into video entertainment. Flip Video products, which include FlipShare software, allow users to organize and edit videos and share them on social-networking Web sites like MySpace and YouTube. Pure Digital has sold more than two million of the popular Flip Video devices.
“Consumer has been a key focus for Cisco for several years; it dates back to 2003 with our acquisition of Linksys,” said Charles Carmel, Cisco’s vice president of corporate development. “Since that time we have been ramping up efforts and focus on the consumer space with smaller acquisitions such as with last year’s (acquisition of) Pure Networks.
“With the acquisition of Pure Digital, we are taking consumer interest to the next level,” Carmel added. “It gives us a great leadership position in the video capture and share market, which is an exciting market opportunity.”
Jonathan Kaplan, chairman and CEO of Pure Digital and soon to be general manager of the combined organization, said the company will benefit from Cisco’s size and technology expertise.
Cisco’s plan comes just one day after news broke that IBM may be in talks to acquire Sun Microsystems. Neither company is commenting on the rumors.
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