Flip-Pocket Camcorders Are the Latest Hot Gadget

If the measure of a gadget's success is its ability to win over the rich and famous, Pure Digital's Flip line of pocket-size camcorders has arrived. As with the Palm Pilot, the Motorola Razr, the BlackBerry and the iPod before it, a host of boldfaced names—Tyra Banks, Paris Hilton, Jessica Alba, Dr. Phil and Ellen DeGeneres—have either sung its praises or been photographed wielding the device. But as grateful as Pure Digital CEO Jonathan Kaplan may be for their attention, there's one celebrity whose endorsement meant the most: Oprah Winfrey. "When you invent a product and you have Oprah hold it up and tell the world that it's one of her favorite things, it's hard to beat," he says. "The actual change on the business has been greater from other things. But I will say that Oprah holding the product has been one of our greatest accomplishments."

If buzz were all Kaplan had accomplished, he and his company would already be a Silicon Valley footnote. But his product line of compact, Flash memory-based video recorders have already captured 24 percent of the overall U.S. camcorder market (second only to Sony), a category that has been flat for the past few years. And when Flash-based camcorders are separated from their counterparts based on videotape, DVD and hard drives, Pure Digital is far and away the leader in that market segment with a 32 percent share, according to NPD Group; Canon's share is 10 percent and Sony's is 8 percent. In mid-November, the company released its first high-definition camcorder in the same slim-form factor. At a cost of $230, Kaplan is hoping that early adopters who want a high-definition camcorder but can't justify high-definition prices will take a serious look.

For a company that's on the cutting-edge of personal video, it's hard to believe that Pure Digital got its start making disposable digital still cameras for drugstores and camera shops. But when Kaplan founded the company in 2001, his goal was to make the entire digital-imaging process more accessible. By 2003, people could buy a Pure Digital camera at places like Walgreen's or Ritz Camera, snap their pictures, then return the cameras and let the retailer handle making prints and putting the images on a CD rather than suffer through that experience themselves.

Next, the company started making disposable video recorders that users could drop off at a drugstore and have the footage burned onto a DVD. But Kaplan discovered something he hadn't expected: consumers wanted to hang on to their camcorders rather than have to return them because it took them much longer to record all 30 minutes of footage than, say, the 25 pictures on a disposable still camera. So in 2006, Pure Digital tested the Point & Shoot Video Camcorder by releasing it exclusively through Target, winning raves from such influential gadget gurus as The Wall Street Journal's Walt Mossberg for its simplicity. The following summer, Kaplan released the re-christened $150 Flip Ultra to more accolades; it zoomed up the sales charts at Amazon and other retailers, and never looked back.

While gadget geeks were among the Flip's earliest adopters, the first wave of user testimonials Kaplan received came from mothers who had been looking for an easier way to record their children and teenagers who wanted to put themselves on YouTube. "They hadn't been able to use a camcorder as easily as they could a digital camera," Kaplan says. The Flip cameras are a breeze to use: press the big red button once to start shooting; press it again to stop. The flip-out USB connector lets you transfer clips to your PC or Mac, and also recharges the device. But its best attribute, which has since been emulated by the majority of competitors, is that its video-management software is stored on the device itself. That allows you to edit and share clips on any computer that has a USB port—without having to schlep around a CD-ROM or other accessory. To hear Kaplan tell it, traditional camcorders are akin to the darkroom era of still photography, and products like his have ushered us into the point-and-shoot age in which video is accessible to the masses.

With Flash-based recorders projected to increase their share of the camcorder market again in 2009, the competition is gunning for the privately held Pure Digital, whose revenues Kaplan projects to rise from nearly $50 million in 2007 to more than $100 million this year. Audiovox senior vice president Ralph Etna, whose company came out with a $160 HD camcorder earlier this year, plans more-aggressive marketing and pricing. "In this economy, people are looking for value," says Etna. Kaplan is appropriately paranoid about the challenge that well-heeled rivals pose, but he's holding the line by keeping his core products easy to use rather than feature stuffed. "We want to show the world that we can innovate with tech and fun," Kaplan says. One such example is the Pure Digital online store: consumers can choose to upload their own patterns and designs which are then printed on the body of their new Flip— at no extra charge. We think the kids will approve.

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