Cisco buys makers of the Flip Video Camera

With online video quickly on the rise, Cisco acquires Pure Digital Technologies for $590 million

Everyday, more and more people are tuning into online video.  Earlier this month, YouTube surpassed 100 million U.S. viewers for the first time, and in January 2009, U.S. Internet users viewed 14.8 billion online videos, according to comScore.  

Pure Digital Technologies, the makers of the popular Flip Video Camera, were just acquired by Cisco for $590 million.  

Sometimes referred to as a, “FlipCam”, the Filp Video Camera appeals to a wide range of consumers.  Its simple, point and shoot technology makes it easy for literally anybody to produce a video and distribute it online.  Pure Digital has also just upped the FlipCam’s technology with the new minoHD, which shoots in 720p.  To add to that, FlipCams are affordable – the HD camera sells for $229.99, the rest all under $200.   Two million Flip Video Cameras have been sold to date.   

Cisco’s strategy in this acquisition is to step into the consumer space of Internet video.  Ned Hooper, SVP of Cisco’s Corporate Development explained, “This acquisition will take Cisco's consumer business to the next level as the company develops new video capabilities and drives the next generation of entertainment and communication experiences.”

Cisco also seems to be interested in Flip Video’s proprietary software, FlipShare, which allows users to organize and edit videos, then upload instantly to YouTube, MySpace and other video sharing sites. 

On top of the $590 million Cisco will pay $15 million in, “retention-based equity incentives for continuing employees,” according to the press release. 

The deal is expected to close in Q4 of 2009.