Flip basically shows up at the same time the iPhone got video. They were dead already and only Cisco didn’t realize it.
It is just that Cisco cut their losses extremely early. There were still 2-5 years left where Flip could have been profitable.
But I will say this:
1. cisco is not a consumer company. they tried with linksys, bailed. tried with scientific atlanta, bailed. no surprise that they bailed on PD.
2. having seen a lot of ASIC acquisitions in my lifetime, which is basically what Pure Digital was - apple knockoff packaging and branding plus an encoder - in my experience tons of startup teams get their first ASIC done, but then totally flub their second (and some of this is the layoff dynamics of how ASIC startups operate on the HW side - unless you immediately start the next chip before finding fit, you have dead weight that you cut). Also, once you show how it's done and have fit, the professionals show up, like Qualcomm, which makes that even harder.
It wouldn't surprise at all if (2) was the culprit.