Say Cheese! Cisco Buys Flip Maker Pure Digital for $590 Mln

Internet gear maker Cisco is branching out into consumer electronics, buying Flip video camera maker Pure Digital for $590 million in stock.

Technology giant Cisco is mainly known for making routers and switches and connectivity gear that helps hold the Internet together, and while the company reaches into consumers’ homes with its Linksys brand of gear, the company has just taken a significant step into the realm of consumer electronics, announcing a deal to buy Flip video camera maker Pure Digital for $590 million in stock. Pure Digital manufacturers popular, easy-to-use, consumer-friendly digital video recorders that are small enough for users to integrated into their everyday lives and offer features like uploading to sites like MySpace and YouTube.

Cisco is eyeing consumer adoption of high-definition digital video as a way to integrate its networking and broadband gear into consumers’ lives. Of course, with improved bandwidth and networking, new communications and media possibilities emerge…and Cisco wants to be supplying the gear to make it all happen.

“The acquisition of Pure Digital is key to Cisco’s strategy to expand our momentum in the media-enabled home and to capture the consumer market transition to visual networking,” said Cisco senior VP Ned Hooper, in a statement. “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 plans to integrate Pure Digital into its Consumer Business Group, which includes the company’s Linksys products. Pure Digital’s CEO and founder Jonathan Kaplan will become the general manager for the combined consumer operation. Cisco is paying roughly $590 million in stock for all of Pure Digital’s shares, and also plans to lay out up to $15 million to keep Pure Digital’s employees on board.

Pure Digital began selling cameras less than two years ago and has already moved more than 2 million cameras.