Why Steve Jobs fears Flip Video (maybe more than Zune)

Many have assumed that Steve Jobs pretty much handed tiny Flip Video it’s lunch last week when he announced that Apple would pro­vide the same capa­bil­ity in the new iPod Nano for free. Some might mourn the lit­tle Flip Video as yet another piece of promis­ing Con­sumer Elec­tron­ics Road­kill whose soon-to-be sun-bleached bones will remind us of  Zune, Palm, Win­dows Media Cen­ter, and the many anony­mous and strangely-colored MP3 and media play­ers now buried in unmarked graves along the Road To Con­ver­gence.  A closer look reveals a dif­fer­ent story, and before we go to that, some con­grat­u­la­tions are in order.

CONGRATULATIONS, Lit­tle Flip!

You have been men­tioned by the biggest name in con­sumer elec­tron­ics dur­ing the month’s most-watched event.  Steve Jobs not only just men­tioned you, but 57 min­utes into his come­back tour event, he shared the stage with you and acknowl­edged that you had nailed it!  This is big!

Really big.  Every­one in sales knows you never men­tion your com­peti­tors unless you absolutely have to.  And even if you men­tion them, you never — and I mean never — give them a complement.

Steve didn’t men­tion Android, Zune, Microsoft, nor the PC dur­ing his pre­sen­ta­tion.  He didn’t men­tion Palm nor Nokia, either.  Just you.  Nice job.  Steve even gave you some well-deserved props, call­ing you, “…a very pop­u­lar one.”  And you looked fab­u­lous!  Bet­ter than Steve, some might say.

Jobs and Flip

Dear reader, if you’re not famil­iar with the Flip Video, click here for a nice review and iPhone com­par­i­son regard­ing our lit­tle celebrity, Flip.   A key fac­toid is that Flip has been a scream­ing suc­cess, sell­ing two million-plus units over the course of two years. And now, Lit­tle Flip, you’ve been men­tioned by Mr. Big­ger. Than. Big.

Cel­e­brate This – You Are in Rare Company.

And after the par­ties have wound down, your Mon­day morn­ing arrives with strong black cof­fee and the real­iza­tion that Steve also said, “…and we’re going to lower the price from $149 to free.

So, what now, Lit­tle Flip?

And one more time, why did he men­tion you?  Is it because you are now Apple Road­kill like some lame MP3 player?

Or,…could it be because Steve sees you as one of the first really cred­i­ble threats to The World Accord­ing to Apple?

Well, not just you, Lit­tle Flip, but your big­ger, richer, more pow­er­ful step-father, Cisco Sys­tems.  This year Cisco bought Pure Dig­i­tal (Flip’s daddy), adding to its rapidly-growing sta­ble of consumer-facing tech­nolo­gies.  (dis­clo­sure: Cisco Sys­tems has been a client of mine).  What you may not be able to do alone, Lit­tle Flip, you may very well be able to do now that you’ve become part of the Cisco family.

It might also be that you’re styl­ish, both phys­i­cally and in your user inter­face.  You’re also styl­ish in a way that might actu­ally make Steve worry a bit…the Out-Of-Box experience.

unboxing

Sweet!  How did a young kid like you you learn to do that?  Oh, that would be your CEO, Jonathan Kaplan, and his team.  And it appears that Jonathan will now be run­ning Cisco’s Con­sumer Group (largely com­prised of the still-dominant Linksys and a few smaller acquisitions).

C’mon, you say.  Cisco a threat to Apple?  That depends.

Cer­tainly some indus­try pun­dits seem to think that Cisco might not be a great com­peti­tor in the con­sumer space.

But my money is on Steve Jobs hav­ing real­ized that Jonathan Kaplan is one of those CEOs who didn’t suc­cumb to  the The Apple Effect – the zombie-like response to Apple’s suc­cess that has left us poor con­sumers with so many pretty-but-clueless-and-brain-dead CE devices over the last five years.  (Try the new Black­berry Storm or the new Palm, if you need an exam­ple.  Actu­ally, go into a mobile phone store close your eyes and grab any phone.  Open your eyes.  My point exactly.  Unless you picked up the iPhone, that is.)

Don’t you think that Steve Jobs may have noticed one of the few Sil­i­con Val­ley CEOs with an eye for style is now run­ning the Con­sumer Group at a $130 bil­lion dol­lar firm just down the road?  I’m guess­ing yes, he prob­a­bly noticed that.  He’s good with details, I hear.   If Lit­tle Flip is up on the Big Screen at the Apple Event, Steve knows who is behind it.  He’s gone after the PC, now he is going after Lit­tle Flip.

Jonathan Kaplan has put up some Steve Jobs-quality num­bers.  Granted, Flip has only sold 2 mil­lion units or so, about 1% of the 220 mil­lion iPods sold to date.   Slightly more impres­sive would be that fact that it sold at a level equal to 10% of the num­ber of iPhones sold.  Even more impres­sive would be that it sold around 15% of the num­ber of iPod Touches!  I think that last point may have got­ten Steve’s attention.

Pure Dig­i­tal was the antithe­sis of Microsoft.  No big bud­gets, no huge mar­ket­ing orga­ni­za­tion, no plat­form syn­er­gies (okay, MSFT has rarely been able to exploit these any­way).  But Microsoft’s huge multi-hundred-million-dollar invest­ment in Zune has net­ted it about 3 mil­lion units sold – only 50% more than the Flip!  (Yes, there is a new one com­ing out and blah, blah, blah…now go back in your cave.)

And I know what you’re think­ing: Microsoft can screw up even the best of prod­ucts.  Yes, true.

But that a startup like Pure Dig­i­tal can show up and nail it, says some­thing about the startup.  And when you com­bine Pure Dig­i­tal with Linksys, the ubiq­ui­tous home router, and a few other pieces of Cisco’s con­sumer port­fo­lio that include media stor­age devices, set-top boxes (they own Sci­en­tific Atlanta) and syn­chro­nized media play­ers, then you might just start to have something.

And then you can add in WebEx, which is one of the top video­con­fer­enc­ing providers, and a hand­ful of other tech­nolo­gies, and all of a sud­den Lit­tle Flip is not so lit­tle and (man­gled metaphor warn­ing!) not really road­kill, but rather, the tip of an ice­berg.

Con­sider this: as eas­ily as Steve Jobs added video to the Nano, Jonathan Kaplan could add music to the Flip. I’m guess­ing that he could lower the price to free as well.  Adding an audio port is eas­ier than adding a camera.

And there’s more for Steve to worry about.  The real bat­tle is not about devices, nor about con­tent, but about some­thing much larger: vir­tu­al­iza­tion – putting your con­tent and your life on the web and in the (com­put­ing) cloud.  It’s easy to for­get that the end­point on the Road to Con­ver­gence does not look like an iPhone or a Nano.  No, that final stop, if and when we ever reach it, looks like all devices, every­where, sup­port­ing you and me and our life-content.

Did I men­tion that Cisco pow­ers the Internet?

Wel­come back, Mr. Jobs.  The game is on.

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