Cisco today announced a “comprehensive plan” to restructure its operations—pulling out completely from certain segments of its consumer offerings and refocusing efforts on five key priorities. This should come as welcome news to customer and shareholders alike, and provide some clarity to an otherwise confused marketplace.

Flip? Out

Closing down the Flip business should come as no real surprise. Once hard to keep on the shelves, the small and affordable point-and-shoot camcorder was unable to compete with an array of new entrants, and increasingly high-quality video on smartphones. I still have one—somewhere.

“Double Down” on Service Provider Space

The pulling back from the direct to consumer space does not appear to mean abandoning existing lines. In fact, in talking to Cisco today at the NAB show, it was clear that the Videoscape business was spared, and remains fundamentally unchanged. Rather than building devices, though, the strategy will be one of enabling them.

On the other hand, ūmi –the consumer Telepresence product/service launched late in 2010—will be folded into the existing enterprise Telepresence business, and the focus will be on devising “go to market” plans with Service Providers, rather than trying to sell and service end users directly. The Cisco exec I spoke with today referred to this as a ‘doubling down’ strategy.

As I mentioned back in October, the high price point, exorbitant service fees and limited utility made ūmi a tough sell from the beginning. I’m still not writing it off, as there are real applications, particularly in the Business to Consumer (B2C) space, but this will likely only achieve any measurable traction under a subsidy model.

Back to basics

Cisco’s consumer strategy had many customers (and industry analysts) scratching their heads. As my colleague, David Mercer points out in a blog posted today, reconciling the company’s dual strategy (Service Provider + Consumer) was never an easy task.

It is, therefore, encouraging to see the company righting its course. Cisco’s core competencies have always sat in the network, and it is exactly there that they should refocus. The most relevant customer base for the company is the Service Provider community, and the announced plans to focus attention that segment is a positive one.