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Shinny new toys for wealthy companies

This week Cisco announced it's killing the Flip, the super simple video-recording camcorder that was such a hit that Cisco bought it for $590 million two years ago.

This seems to be a typical thing big companies do. Microsoft bought Danger the maker of the popular Sidekick, had them made the Kin (Microsoft's way) and then killed it. Activision bought the Guitar Hero Franchise, then killed it (buried it actually, by milking it for all it was worth then essentially laying off the developers).

Makes me wonder if this is a new-toy syndrome. The company buys a shinny new company and it's excited until the new-car smell wears off, then they dump them like a petulant child that should be Harry Potter's older and portlier cousin.

But what I really think is going on is bad planning and unrealistic expectations. I think Cisco bought Flip with the impression that it was going to give money like a cow gives milk. The minute they start under-performing, they just extirpate it like a tumor. It's like buying a property that has grown in value every year 10% and expecting that to continue forever. It's completely unrealistic, and yet that's what seems to be having. When this small companies become divisions of larger ones, it seems from the outside that all that they're evaluated on is profit. This is not only short-sighted, but terrible strategy.

Take Apple for an example of a company doing it a different way. Apple had a division that made a tablet-touch based interface but it wasn't any good as a tablet. However it was kept on, until suddenly all that technology could be used for the iPhone and they had a hit. Cisco could have done something with networked video, or use some sort of teleprecence or use those Flip cameras for something useful, but they just sat on the property, until it stopped making the money they wanted.

Hewlett Packard seems to be doing this integrative thing with its purchase of Palm. This makes me want to keep an eye on them.

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