"Flips now represent an astonishing 35 percent of the camcorder market. They’re the No. 1 bestselling camcorder on Amazon. They’re still selling fast."
It's highly unlikely, at least to my mind, that Flip would grow to the point of taking over the world, but it's easy to imagine that it could've kept going for a long time if Cisco hadn't axed it.
Anyway, they killed the product in the most expensive way possible. If they wanted to save money they could have just cut the R&D budget, reduced production and quietly sold off their inventory. Instead they waited until a few weeks before introducing the product before killing it.
PS: As to why: They make far more money pretending that video conferencing is difficult. N flip phones + N laptops (which people already have) + wifi = 2, 3, or 4 way videoconferencing on the cheap.
You're probably right. Maybe Cisco realized they were in an Innovator's Dilemma situation and they are just trying to delay the disruptive innovation, and its attendant lower margins, by buying the Flip and killing it.
(On another note, is Mac OS 9 valuable now? Will it become more valuable eventually? Should Apple just have closed shop since they had a small marketshare and a product that isn't valuable now? Could the lessons learned from the Newton have possibly been applied to make some other kind of consumer device?)