Why Are People Shocked About Flip?

Earlier this week, Cisco announced a restructuring that basically eliminated the Flip camera group, a company that they bought for $590 million a few years ago. Following that announcement, I've seen a number of posts that reflect a sense of shock surrounding the death of the product. Me, I'm more surprised that people seem surprised.

When the iPhone 3GS was launched and included video capabilities, there were numerous articles and posts about how iPhone video would be the death of the Flip. Since that time, there's been a lot of innovation in mobile video on the smartphone platform -- Apple even added iMovie and basic video editing to the platform with the iPhone 4. Meanwhile, the Flip platform hasn't evolved. This leads to several questions:

• Was the acquisition simply a strategic blunder on Cisco's part?
• Was this a technology or other resource acquisition?
• Was this the result of a large organization being unable to provide the fertile environment needed by a start-up to prosper?
• Would a start-up version of Flip been able to innovate enough to remain competitive?

In the end though, this shift in the market has been going on for two years. I'm not really sure how that constitutes a surprise.