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3/7/2011
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Cisco Cuts Price Of Umi Video Conferencing

By making its telepresence technology cheaper and easier to integrate with businesses and service providers, the networking company is hoping to entice more customers.

Cisco Umi
Slideshow: Cisco Umi Takes Telepresence To The Home
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Cisco dropped the price of the consumer version of its Umi high-definition video-conferencing system on Monday and introduced a less-expensive model with lower resolution, as the company looks to entice more consumers and businesses to consider Umi.

Cisco cut the price Monday of the high-definition version of the Umi system, which has a resolution of 1080p, to $499. The company also introduced a lower-resolution system for $399. The latter system has a resolution of 720p, or 1280 x 720 pixels. Both products carry a service fee of $99 a year, or $9.95 a month, for unlimited calling.

Cisco first introduced Umi in October, providing only the high-resolution model for $599, plus a monthly service charge of $24.99. At the time, analysts expected Cisco to eventually lower the price for the system, which includes a video camera and device that enable video calling via a flat-panel TV.

Umi is not targeted at people who use Skype's free service today to place video calls to friends and family via an Internet-connected PC or Mac. Instead, Cisco is focused on providing a high-quality system centered more around business.

Umi is interoperable with the high-end video-conferencing system Cisco sells to companies. The vendor claims 85% of Fortune 100 companies use its video-calling technology, which Cisco calls "telepresence." By making the consumer and business systems interoperable, Cisco is opening the possibility that a company could purchase an Umi system for employees in remote places, Irene Berlinsky, analyst for IDC, said in an interview. Other possible scenarios would include healthcare providers communicating with patients at home or schools offering classes via video conferencing.

Cisco also is increasing the number of devices that can communicate with an Umi system. The company announced Monday that it plans to release this summer free software for calling Umi from a PC or Mac. The Umi Connect application is currently in beta testing.

Cisco's video-conferencing technology is currently undergoing field trials in Korea, where government and businesses are testing video-conferencing as a way to offer services to consumers through their digital TVs, the company said. In the United States, Verizon is expected to offer Umi for its Internet TV service, FiOS. Service providers in Europe, Latin America, and Asia also are testing Umi.

Skype is likely to remain for sometime the video-conferencing system of choice for people willing to put up with low quality video by using a free service. Skype has 560 million users today worldwide, with 40% using the network for video chats, according to the company.

In situations were higher quality video calling is needed, then Umi or other similar systems may make sense. Slightly more than 19% of U.S. Internet users today use video chat, and 22% of that group would be willing to pay for a high-quality system, according to IDC.

While a consumer market for video conferencing is emerging, the technology is unlikely to become mainstream until there's interoperability among the various systems, so a person can make a video call much like they place a telephone call.

That kind of interoperability is in the very early stages. For example, Umi can receive and make calls to Google's video chat service. Nevertheless, for the time being, Cisco is likely to pursue a more closed approach in trying to increase its share of the high-end of the market.

"For Cisco, mass market adoption is not necessarily their plan for [Umi]," Berlinsky said. "From the very beginning they developed it as a higher end product. They don't intend for everyone to buy this. If they did, then the price would be 10 bucks."

So while Cisco's approach of starting at the high end and expanding business use to reach consumers is the opposite of Skype's, the key metric for measuring success will be the same: The number of people using the product.

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