The Story of the Successful Life and Abrupt Death of Flip Video Cameras
The Flip Video cameras took the world by storm in 2006. And like most storms, damage was left in Flip’s wake to the tune of a $300 million loss. YouTube creator Krazy Ken of Computer Clan takes a deep dive into the wild story of Flip’s dizzying heights and shocking lows in his newest video.
While Krazy Ken is well-known among technology enthusiasts for his great videos detailing how various tech products and companies have failed and his work exposing scams, he has also investigated camera companies a few times, including through his look at the infamous Light L16 camera last year and a post-mortem on failed camera company Lytro.
Neither the Light L16 camera nor the Lytro ever achieved much commercial success, but the Flip Video cameras did. The first Flip Video cameras arrived at a time when smartphones weren’t the image-making powerhouses they are today. As Krazy Ken says, for many people, the Flip was their first video camera.
“A compact and affordable camera like this was appealing,” he explains, “but despite selling millions of units, the popularity rose and fell really quickly.”
The Flip Video cameras were created by Pure Digital Technologies, a company was founded by entrepreneur Jonathan Kaplan. He had previously worked for Condé Nast, founded MovieStreet, and served as president and CEO of Sega.com (yes, the video game company).
The journey from Pure Digital’s first mass-market cameras, single-use digital stills cameras, to the Flip Video camera has numerous fascinating chapters. Krazy Ken points toward one specific moment that had far-reaching impacts beyond a single early 2000s video camera product.
When the Flip was launched, it was actually called the Point and Shoot Video Camcorder Model 225. Users could easily connect it to their computer via a flip-out USB connector to download their videos, which could be uploaded to different platforms, like YouTube and Google Video.
In the short period between the Model 225 launching in May 2006 and Google buying YouTube for $1.65 billion in October of that year, Google Video executives were debating whether to make a deal with Pure Digital to make Google Video the primary hosting platform for “Flip Camera” user content. There were even talks of the camera becoming a Google-branded product.
Ultimately, Google Video’s director, Jennifer Feikin, opted not to go in that direction and instead purchased Google Video competitor YouTube, a move widely considered one of the most business-savvy acquisitions in technology history. That $1.65 billion purchase price in 2006, a tidy sum at the time, is chump change compared to YouTube’s current annual revenue of over $31 billion. What might have happened if Google put its eggs in the Flip Video basket instead?
Although Google went the YouTube route instead of making a deal with Pure Digital, that doesn’t mean the company’s new video camera was a dud, far from it. In short order, the camera earned double-digital market share in the United States, and Pure Digital had attracted nearly $100 million in funding.
In 2007, Pure Digital relaunched and rebranded its Point and Shoot Video Camcorder as the Flip Video. As Krazy Ken’s in-depth testing shows, not only was Flip popular with consumers at the time, but it was also a genuinely good product, especially given its $120 starting price.
Sure, the resolution wasn’t that high (640 x 480), and image quality was compromised by the heavy compression needed to record 30 (or 60) minutes of footage onto 512 megabytes (or one gigabyte) of internal storage. Still, compared to other compact video cameras of the day, it was good. Add in the Flip’s accessible price point and ease of use, and the initial sales success makes a lot of sense. It was a good pocketable video camera at a palatable price at a time when there weren’t many compelling alternatives.
“The Flip was actually a good product,” says Krazy Ken. “And that’s kind of what frustrates me about this whole freaking story! The Flip is one of these weird exceptions to the other tech fails that I talk about. Like the Lytro and the L16, remember when I talked about those? Those companies completely flopped but the products weren’t really that good to begin with. So from a high level, it kind of makes sense as to why the whole thing failed.”
“But with Flip, the products are actually good, so why did they just fizzle from existence?”
At this point, things were looking good. New Flip Video models arrived with improved features, different color options, and an improved design. The Flip Video Ultra, in particular, delivered significant performance and usability gains, including better video quality, improved display, better battery life, and a tripod mount. It was, at one time, the number two best-selling camcorder in the United States. As Krazy Ken notes using nostalgic archival footage, Oprah even named the Flip Video one of her “favorite things.”
In November 2008, high definition (1,280 x 720) made its way to the Flip Video family in the form of the Flip Video Mino HD. The move to HD and improved software propelled Flip to becoming the best-selling camcorder in the U.S. In terms of total camcorder market share, Flip trailed just one company: Sony.
Flip was making money, selling millions of cameras, and routinely releasing new and improved products. So, what the heck happened? Sometimes, success can start a chain of events that unravel a company.
On March 19, 2009, Cisco announced it had acquired Pure Digital Technologies for $590 million in stock. When the deal closed in May 2009, Kaplan became the head of Cisco’s consumer business division.
“Over the next 21 months, Cisco heavily marketed the Flip with ad campaigns, product placements, and event sponsorships,” Ken explains. “Apple also wanted in on this market.” Apple then added comparable video recording capabilities to its iPhone 3GS smartphone.
At this point, Cisco didn’t see the writing on the wall and continued to release new Flip Video camera models. By September 2010, nearly five million Flip cameras had been sold worldwide. Early the following year — Flip’s final year — the brand even briefly surpassed Sony for the number one position in camcorder market share.
Then, the script flipped. In February 2011, Kaplan stepped down. Two months later, Cisco restructured its consumer business, and the Flip brand was killed just one day before the newest model was slated to hit store shelves. Flip was snuffed out at its peak. As part of the restructuring, Cisco lost $300 million, and 550 employees were let go or moved to different positions. What a remarkable fall from grace.
Krazy Ken’s video above offers many more incredible details, including where Kaplan is now (it’s shocking) and what industry experts think led to the downfall of the Flip Video camera series. Krazy Ken has many more entertaining and educational videos on his YouTube channel, Computer Clan.
Image credits: Computer Clan
