Networking mogul Cisco loves video but has it flipped in buying Pure Digital? Pure Digital out-smarted Asian producers to get to low-cost video first. Pure Digital's small, cellphone-like cameras sell for $130 to $230 with a simple one-button interface, a fold-out USB port and a simple software to move videos to the Web. An HD version of the camera is only $229.

That’s why Pure Digital has sold 1.5 million Flips, compared to the camcorder market's 20 million units a year in sales. And why Cisco will pay $590 million in stock for Pure Digital.

Cisco will try to integrate the Flip with home-networking products (Linksys routers and Scientific Atlanta set-top boxes), and hopefully use the Flip's cheap HD video technology to take home its pro video conferencing system, Telepresence.

By 2012, Cisco expects video will account for 50% of all consumer bandwidth, about 2X the total number of bits per second that consumers use today.

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