I think the Flip was killed because Enterprise customers turned away from Cisco. People like me openly laughed and denigrated Cisco for “playing with toys” instead producing better products. And that cost more money, way more money, in lost sales at 65% gross profit margin than any consumer/retail product will make.
When you drop a billion bucks in revenue (as Cisco has) then you lose $400 million odd in profit because customers aren’t taking you seriously.
The Cisco Flip wasn’t killed by the iPhone 4 or smartphones in general. Or any other cameras. At least, smartphones weren’t the only problem – I’d guess that Cisco had more designs under way, but they didn’t execute well to bring them to market – at least, no worse than Canon or Kodak.
But losing that revenue is core business. That hurts.
That’s why they Cisco threw it away and didn’t bother to sell it. A $540 million mistake that needed to be over so as to stop the bleeding in the core business.
This also doesn’t bode well for the Cisco Cius tablet. It’s also a consumer product dressed up as an enterprise device. So far, I’ve not heard a single person who has touched and seen one say anything positive about the product. And it’s been around the place for a long time.