Cisco is shutting down its Flip camera division as the company reacts to an edict from chief executive John Chambers calling for a return to core values.
Chambers said in an email to investors and analysts that there are "areas we have to fundamentally change", and confirmed that the decision to shut Flip will help the firm return to focusing primarily on the business space.
"We are making key targeted moves as we align operations in support of our network-centric platform strategy," he said.
"As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimise and expand their offerings for consumers, and help ensure the network's ability to deliver on those offerings."
Up to 550 employees are set for the axe by the fourth quarter of 2011 as a result of this move, Cisco confirmed. The firm plans to support current FlipShare customers and partners with a transition plan.
Cisco acquired the company behind Flip, Pure Digital Technologies, in March 2009 for $590m (£362m).
V3.co.uk spoke with representatives from Flip at the Gadget Show on Tuesday who touted its growing use within enterprises owing to its video sharing capabilities, but mentioned nothing of the planned closure.
Staff later refused to comment on the announcement when asked for their thoughts.
Cisco also announced that it will integrate its Umi product into the firm's Business TelePresence product line.
Cisco will refocus the Home Networking division, called Linksys, to drive profitability and improve its integration into the company's core networking infrastructure, as the demand for video in the home increases.
Clive Longbottom, an analyst with Quocirca, said the decision to close down Flip "had to be done" given the fact that video technology on smartphones is now equal to the Flip.
"As more and more standard cameras began to do full HD video the idea of a 'cheap', 'pocketable' device that cost more than a phone or a camera, was about the same size and only did one thing meant the writing was on the wall," he said.
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