Cisco's surprise decision to shut down the Flip unit was part of what the company said was a move to exit aspects of its consumer businesses and focus on other priority areas.
Cisco said the shutdown of Flip will result in restructuring charges of up to $300 million this fiscal year and the elimination of 550 jobs.
The San Jose, California-based Cisco said it would support current Flip customers and partners with a transition plan.
Cisco bought San Francisco-based Flip maker Pure Digital Technologies in March 2009 in a move that signalled a more consumer-oriented shift by the leading manufacturer of switches and routers.
In a statement Tuesday, Cisco said it was realigning its remaining consumer businesses "to support company priorities -- core routing, switching and services; collaboration; architectures; and video."
"We are making key, targeted moves as we align operations in support of our network-centric platform strategy," Cisco chairman and chief executive John Chambers said in a statement.
"As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimize and expand their offerings for consumers, and help ensure the network's ability to deliver on those offerings," Chambers said.
Millions of Flip digital camcorders have been sold around the world.
Relatively cheap at between $130 and $230 dollars, they are renowned for being simple and easy to use.
They shoot up to 60 minutes of high-quality video which can be quickly uploaded to the internet or shared by email.
Cisco shares were up 0.49 per cent at $17.56 in early trading on Wall Street.