Cisco Acquires Pure Digital for $590 million

San Francisco (CA) – Just as speculated earlier this month, Cisco Systems has officially acquired Pure Digital Technologies, a San Francisco based company, the maker of the highly popular Flip video camera, for $590 million.

Pure Digital’s Flip video cameras are tiny, user friendly handheld devices designed for users who have a desire to quickly and efficiently upload their footage to Internet video hosting sites. The Flip camera will cost you anywhere from $130 to $230 depending on storage capacity and features. Last year Pure Digital sold 1.5 million cameras, and held a 24 percent share of the camcorder market.

“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 Ned Hooper, senior VP of Cisco’s Corporate Development and Consumer Groups. “Pure Digital has revolutionized the way people capture and share video with Flip Video. 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.”

The company plans to develop new video capabilities and take advantage of the FlipShare “editing and organization” software already in place.

Pure Digital will become a part of Cisco’s consumer unit. Pure Digital’s CEO, Jonathan Kaplan, will act as general manger of the unit, reporting directly to Ned Hooper, president of Cisco’s corporate development and consumer groups. The consumer unit already includes Linksys along with storage and audio products.

The acquisition has been highly desired by Cisco, which has a networking empire from the San Jose, California area, as the company continues to point itself in the direction of both video and Web 2.0 while still digging at the consumer market via its Linksys product lines. The company plans to stick with its strategy to take more control of the home network market.

The company’s push into the home networking market began in 2003 when they acquired Linksys, and then went a step further in 2005 with the acquisition of Scientific-Atlanta. In 2008 the company added to its list of acquisitions Pure Networks, a company that provides home networking and management software.

The deal will close in the fourth quarter. Cisco is paying $15 million in retention-based equity incentives to keep the current Pure Digital team on staff.