Industry screw-ups of 2011(6)

Industry screw-ups of 2011

3. Cisco does Flip-flop on consumer camera
Cisco System's zigzag moves into consumer electronics started to unravel in April, when the company killed the popular Flip video camera it acquired with Pure Digital Technologies for $590 million in 2009. The unraveling was complete by July, when Cisco laid off 6,500 people in a major shakeup. The Flip represented the latest and most high profile piece of a patchwork consumer strategy for the company.

The networking giant had spent nearly a decade assembling pieces of a consumer play, starting with the 2003 acquisition of home networking specialist Linksys. In March 2009 it bought startup Pure Digital for a whopping $590 million, arguing that Flip cameras would fuel growth of video on the Net, driving Cisco's core router and switch business.

John Chambers, Cisco's chief executive, warned the company had lost its way in April, in the middle of a year of disappointing results. Cisco was suffering market share losses in its key networking markets. Meanwhile it faced difficulty keeping pace with the fast rise of video capabilities on smartphones.

The July re-org that promised on-going process reviews assuaged Wall Street's concerns for the company. In an EE Times Confidential analysis, we argued it did not go far enough in getting Cisco to re-focus on its core back-end business and give up its consumer ambitions.

– Rick Merritt

2. Solyndra scandal sparks solar meltdown
The U.S. solar industry had a virtual meltdown in August, when three panel startups went belly up including Solyndra LLC, sparking a political scandal and investigation.

It remains to be seen if Solyndra's problems will sour investors on still-promising CIGs and thin-film solar technologies.

Solyndra's bankruptcy came just 15 months after President Barack Obama visited the company's high-profile manufacturing plants along Silicon Valley's I-880 highway. Obama praised the company's innovation in using a novel cylindrical panel based on emerging copper indium gallium selenide (CIGS) technology.

The U.S. Department of Energy granted Solyndra a $535 million loan guarantee. But meanwhile China was pouring even larger subsidies into more mature and lower cost crystalline technology, driving prices as low as $1.20 per Watt, below Solyndra's manufacturing costs.

Analysts forecast China and Taiwan together could command as much as 60 percent of the global solar panel market when the books are closed in 2011. Anticipating the trend, some U.S. equipment suppliers and panel makers including Applied Materials had already shifted operations to China.

In a resulting Solar-gate, politicians drew links between Solyndra backers and Obama supporters leaking emails urging quick approval of the loan guarantee. Solyndra CEO Brian Harrison took much of the hit for failing to inform even committee Democrats of his company's "perilous condition" prior to its collapse.