DXG Picking Up Retail Distribution After Flip Exit, Marketing Chief Says

Cisco’s decision to drop Flip camcorders (CED April 13 p7) is already enabling DXG to expand retail distribution for its camcorders, Paul Goldberg, DXG USA senior vice president of marketing and sales, told Consumer Electronics Daily. DXG is perhaps better positioned than most rivals to land new accounts because its camcorders, like Flip models, are typically low-priced alternatives to products from Sony and other CE giants. But Goldberg thinks Cisco’s move was “pretty sad,” he said, saying some friends at Cisco lost jobs as a result.

DXG “just picked up” Fry’s Electronics, and “I believe that was directly related to” Flip’s exit, Goldberg said. “I've been trying to get in” their stores “for eight years and all of a sudden my calls were being returned,” he said. DXG products were already being sold at Walmart stores, but Goldberg said “we see the opportunity to expand our” relationship with Walmart also as a result of Flip’s exit. “I'm hoping” to pick up more new accounts also, he said, saying DXG salespeople were “out there looking and pushing.” It’s, for example, started talking to Target, he said. There’s “a good chance that there is going to be an opportunity there as well,” he said. DXG had been in Target for three years before the retailer cut back on its product assortment, he said. “We're looking on it as an opportunity to get back in,” he said.

Goldberg was surprised by Cisco’s decision to drop Flip, especially its decision to not even sell off the division’s intellectual property and other assets, he said. But in retrospect, he said, “the writing was on the wall” about Flip’s fate. Flip’s “innovation cycle seemed to have abated quite a bit” and recent products from it “didn’t catch on” with the public, he said. For instance, it was “very late to enter the HD camcorder business” when Flip did, and when it finally did so, the focus was on 720p models “when everybody else was really starting” to focus on 1080p, he said. Flip also “started to get slow to market,” and “when that starts to happen it’s almost a self-fulfilling prophecy” that a manufacturer will fail, he said. Meanwhile, “a lot of money” was being spent on Flip marketing and the company “had problems in terms of profitability” of that division, he said. Its “relevance within the Cisco organization was definitely questionable” also, he said.

DXG wanted to buy Flip, but it was “not for sale,” Goldberg said. He thinks it was “really unusual to see” a company “dump a $600 million investment” like that, he said. Cisco formed a consumer business group in 2008, building on its $500 million acquisition of Linksys. It paid $590 million a year later to buy Pure Digital Technologies and its Flip camcorders. One other possible factor for Flip’s fall could have been Cisco’s inability to retain some of the original Flip management after the purchase, Goldberg said. Flip had sold 2 million units over two years, pioneering a category of small camcorders with built-in storage that connected to PCs through USB ports for uploading, editing or printing motion or still images. Priced in the $129 to $229 range, Flip surged to become a top-selling brand. But as competitors poured into the market, Flip’s market share dropped to 17 percent in the 12 months to February from 26 percent a year earlier, trailing Sony (18 percent), NPD analyst Stephen Baker said.

Taiwan-based DXG wasn’t significantly impacted by the March 11 earthquake in Japan, Goldberg said. There were “some issues with controllers” for memory from Samsung and Toshiba in Japan, but DXG turned to Singapore for supplies of those components, he said. “About the only thing that really affected us” as a result of the quake were supplies on a specialized lens from a Japanese supplier he didn’t name for DXG’s new top-of-the-line 2D camcorder, the $350 1080p HD DXG-5K1, he said. That model was supposed to ship in June, but will now be delayed until July “primarily” due to the supply issue, he said.

One other camcorder that DXG bowed at CES will ship one month late due to a supply issue, but one not related to the Japan disaster, Goldberg said. The entry-level Pro Gear DXG-5FO 1080p HD camcorder was supposed to ship in March, but is arriving this month instead due to a processor shortage from chip supplier Ambarella, he said.

DXG is “getting ready” to ship the 3D products that it showed at CES, including the $299.99 DXG-5F9V camcorder that can record 3D and 2D video and still photos (CED Jan 14 p1). It was, however, originally slated to ship last month. The reason for the delay on that SKU wasn’t immediately given. Also coming from DXG is a 3D still camera in May at $79.99 that will come bundled with three 3D viewers, Goldberg said. When shown to us at CES, he said it would cost $49.99 and ship in March. The reasons for the changes weren’t immediately known. DXG will also sell a five-pack of viewers at about $10, Goldberg said.

The company also added one more 3D camcorder to its line that wasn’t shown at CES, the $300 DXG-5G2 with “full 1080p” in a “candy bar"-style configuration, Goldberg said. It can shoot 5-megapixel still photos, as well as record 3D and 2D video and stills, he said. It’s similar to the 2D Twist DXG-588 1080p model that was shown at CES and that’s shipping now at about $150, he said.