Cisco Subnet

"Market adjacencies." That's the business-speak term for video that John Chambers loves in this YouTube interview posted late last week.. He is using that term to explain a strategy around the company's collection of offbeat, acquired products that range from set-top boxes to a handheld consumer video recorder.

In fact, he even tells the story of the first time he saw a Flip Video recorder, made by Pure Digital, the company that Cisco acquired in March to the bafflement of industry observers. The CEO od Pure Digital tried to give Chambers a video, Chambers refused the gift but offered to buy a device and then flipped out and bought the whole company instead. What caused him to go head-over-heels? The fact that Flip had a network plug. Oooh, baby. If you want to get your company bought by Cisco use "video" and "network" in the same sentence (or in some way shape or form) in the same device and it's a shoo-in.

As expected, Cisco today announced its intent to acquire privately held Pure Digital Technologies, creator of the Flip video camcorder for consumers, for $590 million in stock. Pure Digital is a "pioneer" in developing consumer-friendly video with mass-market appeal, Cisco says.

The acquisition of Pure Digital is key to Cisco's strategy to expand momentum in the media-enabled home and to capture the consumer market transition to visual networking, Cisco said in a statement.

Cisco has won much attention from consumer news sites since the New York Times reported Monday that the networking giant at CES next week is expected to unveil a digital stereo system that can move music wirelessly around a house, among other consumer offerings. But analysts and pundits say there are hurdles that Cisco must overcome in a market where Cisco is an unknown brand. Pundits also point to similar offerings from Sonos, Logitech and Apple.