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Cisco Ditches Flip and $590 Million
darthcamaro writes "Remember the Flip? When Pure Digital Technology first came out with the device it was one of the hottest gadgets, providing users with an ultra-portable camcorder. Then Cisco came along and bought the Flip for $590 million in 2009. Now less than two years later, Cisco is throwing the money, 550 employees and the Flip out the door." Wired has an analysis of why Flip floundered. I hope this means I can find a AA-powered Flip UltraHD for $50 in a clearance bin.
The article asserts that smart phones recorded just as well, making the Flip redundant. I go a step further and postulate that smartphones are frankly more convenient. I don't always grab my camcorder when I'm heading out the door just in case I see something awesome and film worthy on my way to work. But I absolutely have to have my cell phone. I do not leave home without it. And hey, if I happen to need to capture a few minutes of video on my phone, I have a 16 gig SSID chip in it AND I can just email the darn thing to myself and have it posted on YouTube or Twitter within ten minutes because of my data plan (something that even a wi-fi connected Flip phone couldn't do most places.)
Occasionally living proof of the Ballmer peak.
Cisco doesn't need to sell Flips in order for the purchase to be profitable. It's highly probably that they purchased Pure Digital in order to strengthen their patent portfolio. If the iPhone or Android devices make use of some inane portable-video technology that Pure Digital patented in designing the flip, it's possible for Cisco to make back their money in licensing agreements with other hardware manufacturers.
The company was understandably miffed about having people going into their local drugstore and buying what would have been a $50-100 gadget for $30. Pretty neat devices. Very lightweight, and rugged as hell. At $30, perfect for strapping onto balloons, kites, and model rockets.
Miffed as they were about the disruption of the business model, they actually didn't get overly litigious about it. They didn't have much of a legal leg to stand on, so they basically asked really really nicely for people to stop, while updating their single-use devices to be a little harder to hack. (It took the community a couple of years to crack the newer firmware, and by that time, the devices, even at $30, were obsolescent.)
The "reusable video camcorder that offers 2-3 times the quality, a zoom lens, and 30 minutes of storage" version of the single-use device became the series known as the Flip. The Flip was an unencumbered version of the grocery store disposable units, featuring more storage and higher resolution, and even at retail prices, if you needed something rugged, lightweight, cheap to power, and still cheap enough that it's not the end of the world if the rocket gets stuck in a tree or your RC aircraft faceplants into the dirt, it was still pretty good value for the money.
The brilliance of this is that even if the Flip itself flops, Cisco still wins in the long run. As long as the Flip and the insane marketing hype surrounding it increased the popularity of HD video sharing on the web, people are going to need more routers in the network itself. I wonder who the ISPs and YouTubes of the world will be going to then...
Cisco never needed to sell the Flip as a physical product, they just needed to sell the idea of shooting LOTS of video and sharing it across the web. It seems like they've succeeded.
-twb
It's worse than that... the MBAs must have paid the engineers peanuts and lit a blowtorch under their asses to ship it, because the "security" on these was laughable (the one thing they had going for them was a Funny Plug(tm) that wouldn't fit a standard USB cable); it took several revisions before the software security measures presented so much as a speed bump. How do I hack thee? Let me recount thy ways...
1) The camcorders used a 128 BYTE(!) challenge/response system to unlock the device over USB. But the first-gen units used the SAME keypair for every device! So extract the key from one, unlock them all.
2) The key could be extracted by desoldering and reading the Flash chip, or... just asking the device nicely! The challenge key and expected response were stored consecutively in memory; you would request the challenge key in 4-byte(?) chunks, and after the 32nd chunk, respond with 32 chunks of response key. But if you instead just kept requesting chunks after the 32nd, it would GIVE you the response key.
3) Eventually they fixed this. But there was still a backdoor / "default" key, leading to the very popular "battery drop" method of unlocking cams. The response key and other housekeeping data were stored in an NVRAM area (actually IIRC just a file called nvram.dat) - if the camera ever failed to boot, it assumed it was a crash due to corrupted NVRAM and replaced it with a known default copy. Letting the batteries drop out about a second after hitting the power switch would replace the response key with a "key" consisting of the imager manufacturer's name spelled backward and then forward.
Eventually (being IIRC a couple *years*) they fixed all of these. You could still do it by shorting pins on the Flash or erasing part of it via external hardware, but the easy point-and-click software hacks were shored up. There was still debate as to whether the keys were algorithmically related to one another or one-time-pad random. Until...
4) Somebody discovered PD left details (possibly code) of the keygen algorithm on their anonymous FTP server! It was pulled before I got a chance to see it ;-) but it was enough information that somebody wrote a tool to bruteforce a master key of some sort, which took a few computers about a week or 2. With the master key found, hackers just updated the GUI software to generate proper response keys, prompting PD to release the "please grant us a Mulligan" letter linked by the GP.
Caveat Emptor is not a business model.